WORKMEN'S  COMPENSATION 
AND  INSURANCE 


Williams  College 

DAVID  A.  WELLS  PRIZE  ESSAYS 

number  5 

WORKMEN'S  COMPENSATION 

AND  INSURANCE 

/? 


BY 

DURAND  HALSEY  VAN  DOREtt 
A.B.,  LL.B.  ' 


(     DEC  7 -1918      I) 


PRINTED  FOR  THE 

DEPARTMENT  OF  POLITICAL  SCIENCE 
OF  WILLIAMS  COLLEGE 

»B  Aoffat,  yard  and  Compang,  flew 

1918 


Copyright,   1918,  by 
MOFFAT,  YARD  &  COMPANY 


T 


TO  MY 
FATHER  AND  MOTHER 

IN  LOVE  AND  GRATITUDE 


FOREWORD 

The  legislative  tendency  of  to-day  is  unquestion- 
ably toward  the  rapid  socialization  of  the  state. 
In  this  movement,  workmen's  compensation  laws 
and  other  statutory  provisions  for  the  insurance  of 
the  industrial  hazard  are  playing  an  increasingly 
important  part.  By  reason  of  the  adoption  of  such 
measures,  first  in  European  countries,  then  in  the 
colonial  possessions  of  the  great  powers,  and  finally 
in  the  vast  majority  of  the  commonwealths  which 
go  to  make  up  the  United  States  of  America,  an 
impressive  body  of  precedent  and  a  wide  divergence 
of  views  on  matters  of  legislative  policy  have  de- 
veloped, to  the  study  of  which  writers  on  economic 
and  social  questions  are  yearly  devoting  greater 
attention. 

The  present  work  is  in  answer  to  the  demand  for 
a  brief  critical  presentation  of  the  subject,  as  dis- 
tinguished from  an  exhaustive  and  non-committal 
treatise.  It  was  written  in  successful  competition 
for  the  1917  award  of  the  David  Ames  Wells  prize 

of  $500,  offered  annually  to  seniors  of  Williams 

vU 


viil  FOREWORD 

College  and  graduates  of  not  more  than  three  years* 
standing,  for  the  best  essay  on  a  subject  in  the  field 
of  political  science  assigned  by  a  committee  of  the 
Faculty.  The  author  is  a  graduate  of  the  class  of 
1914.  The  essay  method  of  treatment  has  been  fol- 
lowed throughout,  and  matter  of  interest  to  the 
scholar  and  the  legalist  rather  than  the  general 
reader  is  relegated  to  footnotes. 

Every  effort  has  been  made  to  keep  the  text  free 
from  inaccuracies.  Perfection  in  this  regard,  how- 
ever, is  hardly  to  be  expected,  especially  in  view  of 
the  mass  of  material  through  which  the  student 
of  workmen's  compensation  is  forced  to  wade,  and 
the  constant  changes  in  the  subject  introduced  by 
new  legislation,  court  decisions,  and  administrative 
action.  The  most  that  the  author  dares  to  hope  is 
that  his  unintentional  transgressions  will  prove  to 
have  been  few. 

My  thanks  are  due  to  the  members  of  the  Faculty 
Committee  on  the  Wells  Prize  Contest,  consisting 
of  President  Harry  A.  Garfield,  Prof.  Walter  W. 
McLaren,  and  Prof.  Theodore  Clark  Smith,  and 
particularly  to  Prof.  McLaren  for  valuable  sug- 
gestions and  unfailing  sympathy  and  assistance. 

D.  H.  V.  D. 

Washington,  July,  1918. 


CONTENTS 

CHAPTER  PAGE 

FOEEWOED vii 

I     UNDEELYING  PEINCIPLES 8 

II     THE  RISE  OF  WOEKMEN'S  COMPENSATION  .      . .  20 

III     QUESTIONS  OF  CONSTITUTIONALITY  5& 

IV     COMPENSATION  LEGISLATION  IN  THE  UNITED 

STATES 84 

V     INSUEANCE  FEATUEES 134» 

VI  How  IT  WOEKS  IN  NEW  JEBSEY     .      .      .      .178 

VTI     THE  ATTITUDE  OF  LABOE 239 

VIII  THE  SOLDIERS'  AND  SAILOBS'  INSUEANCE  ACT  265 

IX  REQUISITES  OF  THE  IDEAL  LAW     ....   296 

BlBLIOGEAPHT 311 

INDEX  . 


WORKMEN'S  COMPENSATION 
AND  INSURANCE 


WORKMEN'S 

COMPENSATION 

AND  INSURANCE 

CHAPTER  I 
UNDERLYING  PRINCIPLES 

A  CAREFUL  text-book  writer  has  defined  workmen's 
•compensation  acts  as  "enactments  which  embody  the 
principle  that  the  workman  is  entitled  to  compen- 
sation for  injuries  received. in  the  course  of  his 
employment."  1  Accepting  this  description  as  ade- 
quate for  the  purposes  of  an  introductory  chapter, 
we  are  led  to  ask :  "Where  and  when  did  this  prin- 
ciple first  gain  credence;  and  why  was  legislation 
necessary  to  engraft  it  on  our  law?"  Until  these 
questions  are  answered,  an  intelligent  study  of 
workmen's  compensation  as  it  exists  to-day  is  im- 
possible. 

For  centuries  before  the  modern  legislation  with 
which  we  are  to  deal,  the  law  had  treated  contracts 

iBoyd,  Workmen's  Compensation,  p.  205. 

3 


4         WORKMEN'S  COMPENSATION  AND  INSURANCE 

of  employment  as  purely  personal  agreements  (the 
interest  of  the  public  in  them  being  overlooked) ; 
and  controversies  arising  out  of  them  had  been  dis- 
posed of  by  the  courts  with  an  eye  chiefly  to  mulct- 
ing the  party  at  fault  for  the  benefit  of  the  party 
injured.  Especially  has  this  been  true  of  suits  by 
the  workman  to  recover  damages  from  his  employer 
for  injuries  suffered  in  the  course  of  the  employ- 
ment. The  question  put  by  the  law  in  such  cases 
has  long  been:  "Was  the  injury  due  to  the  posi- 
tive fault  or  culpable  negligence  of  the  employer?" 
Unless  this  query  were  answered  in  the  affirmative, 
damages  or  compensation  for  the  injury  could  not 
be  recovered,  and  the  unfortunate  workman  was 
left  to  his  fate.  Such  was  the  common  law  of 
negligence. 

It  will  readily  be  conceded  that  this  narrow  code, 
even  if  calculated  to  work  substantial  justice  in  the 
rare  cases  where  the  relation  of  master  and  servant 
was  a  purely  personal  and  intimate  one,  is  wholly 
unadapted  to  the  conditions  of  modern  industry, 
where  factory  labor  is  the  rule  and  personal  con- 
tact of  employer  and  employed  is  the  exception; 
yet  it  has  been  made  even  harsher  and  more  anach- 
ronistic, in  countries  following  the  English  law, 
by  the  importation  of  three  peculiar  doctrines. 


UNDERLYING  PRINCIPLES  5 

These  are  known  as  the  contributory  negligence 
rule,  the  fellow-servant  rule,  and  the  doctrine  of 
assumption  of  risk. 

The  contributory  negligence  rule  is  not  peculiar 
to  the  law  of  master  and  servant,  but  is  broadly 
applicable  to  all  cases  of  accidental  injury. 
Briefly,  it  is  that  if  the  party  injured  has  by  his 
negligence  contributed  to  the  risk  which  occasioned 
his  injury,  he  cannot  recover  compensation  for  such 
injury  in  an  action  against  the  carrier,  master,  or 
other  negligent  party.  Contributory  negligence  of 
the  injured  workman  is  a  perfect  defense  for  the 
employer  in  such  suits.2  The  test  of  whether  it 
exists  in  a  particular  case  has  been  well  formulated 
in  a  leading  Indiana  decision:  "If  the  risk  is  so 
great  and  immediately  threatening  that  a  person  of 
ordinary  prudence,  under  all  the  circumstances, 
would  not  take  it,  contributory  negligence  is  estab- 
lished. If  the  risk  is  not  so  great  and  immediately 
threatening  but  that  a  person  of  ordinary  pru- 
dence, under  all  the  circumstances,  would  take  it, 
contributory  negligence  is  not  established."  3 

The  fellow-servant  rule,  or  the  "doctrine  of  com- 
mon employment,"  as  the  English  call  it,  is  said  to 

2  Burdick,  Law  of  Torts  (3d  Ed.),  p.  198. 

•  Davis  Coal  Co.  v.  Poland  (1901),  158  Ind.  607,  62  N.  E.  492. 


C         WORKMEN'S  COMPENSATION  AND  INSURANCE 

have  originated  in  the  case  of  Priestley  v.  Fowler 4 
in  1837;  though  it  has  been  pointed  out  that  that 
case  is  authority  for  no  such  broad  proposition.5 
But  whatever  its  origin,  it  has  taken  a  mighty  hold 
on  English  law,  and  is  the  prevailing  doctrine  in 
jurisdictions  where  it  has  not  been  abolished  by 
statute.6  The  general  rule  has  been  stated  as  fol- 
lows :  "One  who  enters  the  service  of  another  takes 
upon  himself  the  ordinary  risks  of  the  negligent 
acts  of  his  fellow-servants  in  the  course  of  his  em- 
ployment." 7  Such  a  proposition  will  be  seen  to  be 
a  natural  outcome  of  the  old  theory  that  contracts 
of  employment  are  personal  contracts,  under  which 
the  master  assumes  no  responsibility  except  for  his 
own  personal  acts  or  omissions ;  but  it  is  grotesquely 
inapplicable  to  modern  industrial  conditions,  where 
the  workman  often  never  sees  his  real  employer. 
It  is  true  that  the  rule  has  been  modified  in  some 
jurisdictions  so  as  to  give  the  workman  a  right  of 
action  against  the  employer  in  cases  where  the  fel- 

«3  M.  &  W.  1,  49  R.  R.  495  (1837). 

•Burdick  (supra),  p.  202;  also  Pease,  J.  G.,  in  15  Columbia  Law 
Review,  at  p.  509.  But  see  Dawbarn,  Employers'  Liability  and 
Workmen's  Compensation  (4th  Ed.),  at  p.  2;  and  Boyd,  Workmen's 
Compensation,  at  p.  26,  for  the  conventional  view  of  the  origin  of  the 
fellow-servant  rule. 

•  Burdick  (supra),  p.  203. 

»  Randall  v.  B.  &  O.  Ry  (1883),  109  U.  S.  478,  483. 


UNDERLYING  PRINCIPLES  7 

low-servant's  negligence  can  reasonably  be  imputed 
to  the  master  on  the  theory  that  the  former  is  so 
completely  clothed  with  the  powers  and  discretion 
which  the  master  could  exercise  if  present  as  to  be 
the  master's  alter  ego  rather  than  a  true  fellow- 
servant.8  But  even  so  the  rule  serves  to  defeat 
recovery  in  that  large  class  of  cases  where  the  fel- 
low-servant's negligence,  though  not  imputable  to 
the  master  personally,  is  clearly  a  risk  inherent  in 
the  employment  rather  than  a  mere  independent 
tort  of  the  fellow-servant  himself.  Speaking  of 
the  rule,  Augustine  Birrell  has  said:  "The  doc- 
trine of  common  employment  was  only  invented  in 
1837.  Lord  Abinger  planted  it,  Baron  Alder  son 
watered  it,  and  the  devil  gave  it  increase."  9 

The  doctrine  of  assumption  of  risk  is  related  to 
the  fellow-servant  rule,  and  really  embraces  the  lat- 
ter. "Under  this  principle  every  risk  which  an 
employment  involves  after  the  master  has  done 
everything  he  is  bound  to  do  for  the  purpose  of 
securing  the  safety  of  his  servants  (including  the 
employment  of  other  servants)  is  assumed,  as  a 

s  Bradbury,  Workmen's  Compensation  and  State  Insurance  Law 
(2d  Ed.),  p.  5. 

•  Quoted  from  The  (London)  Times  of  May  18,  1897,  in  an  article 
on  Workmen's  Compensation  and  the  Theory  of  Professional  Risk, 
by  F.  P.  Walton  in  11  Columbia  Law  Review,  pp.  36-50,  at  pp.  38-39. 


8          WORKMEN'S  COMPENSATION  AND  INSURANCE 

matter  of  law,  by  each  of  those  servants."  10  And 
the  broad  proposition  has  been  stated  by  another 
writer  thus:  "When  a  man  enters  another's  em- 
ploy he  does  so  with  his  eyes  open,  and  with  a 
knowledge  of  the  risks  incidental  to  it,  including 
those  due  to  the  negligence  of  fellow-servants,  and 
those  he  contracts  to  take,  e.  g.,  a  miner  or  a  sailor, 
whose  occupations  of  their  very  nature  are  danger- 
ous." "  The  doctrine  was  first  authoritatively  laid 
down  in  1842  by  Chief  Justice  Shaw  of  Massa- 
chusetts, in  a  famous  case.12 

It  is  true  that,  to  offset  the  several  defenses 
which  the  employer  had  to  an  action  by  the  work- 
man for  injury  suffered  in  the  course  of  his  employ- 
ment, the  common-law  laid  certain  duties  upon  the 
employer,  breach  of  which  was  considered  neg- 
ligence or  fault  on  his  part.  These  duties  were: 
(1)  to  employ  suitable  fellow-servants;  (2)  to  es- 
tablish and  promulgate  proper  rules;  (3)  to  pro- 
vide a  safe  place  to  work;  (4)  to  furnish  safe  ap- 
pliances; (5)  to  warn  youthful  and  inexperienced 
servants  of  the  dangers  of  the  employment.  But 

10  Boyd,  Workmen's  Compensation,  p.  5. 

"Dawbarn,  Employers'  Liability  and  Workmen's  Compensation 
(4th  Ed),  p.  2. 

"Farwell  v.  Boston,  etc.,  R.  Co.,  4  Met.  (Mass.)  49;  see  also  Boyd, 
Workmen's  Compensation,  at  p.  26. 


UNDERLYING  PRINCIPLES  9 

these  duties  were  far  from  nullifying  the  special  de- 
fenses we  have  discussed.13  Thus,  though  the  mas- 
ter was  under  a  duty  to  employ  suitable  fellow-serv- 
ants, he  discharged  himself  of  all  responsibility  by 
exercising  reasonable  care  in  their  selection ;  if,  after 
such  due  care,  an  injury  happened  to  a  servant 
through  the  unfitness  or  negligence  of  a  fellow- 
servant,  the  master  was  not  liable  therefor. 

It  will  be  seen,  then,  that  the  common-law  of 
England  and  the  United  States  rested  the  em- 
ployers' liability  to  the  workman  for  injuries  to 
the  latter  in  the  course  of  his  employment  solely 
on  principles  of  tort.  The  workman  could  re- 
cover compensation  from  the  employer  only  when 
he  could  clearly  establish  that  it  was  the  latter's 
fault  that  the  injury  occurred;  and  the  number  of 
ways  in  which  such  responsibility  could  be  shifted 
I  have  already  indicated.  When  the  accident  was 
due  to  the  inherent  hazards  of  the  employment,  to 
the  act  of  God,  or  where  the  blame  could  not  be 
fixed,  the  employer  was  not  liable.14 

This  review  of  the  state  of  the  common-law  in 

is  Burdick,  Law  of  Torts  (3d  Ed.),  TP-  184-197;  also  Boyd,  Work- 
men's Compensation,  p.  2. 

i*  Boyd,  Workmen's  Compensation,  p.  6.  These  rules  are  especially 
unjust  in  view  of  modern  impersonal  relations  between  employer 
and  employed.  Commons  and  Andrews,  Principles  of  Labor  Legis- 
lation, pp.  357-358. 


10        WORKMEN'S  COMPENSATION  AND  INSURANCE 

England  and  America  prior  to  the  passage  of  the 
workmen's  compensation  acts  puts  us  in  a  fair  way 
to  answer  one  of  our  questions:  "Why  was  legis- 
lation necessary  to  engraft  the  principle  of  work- 
men's compensation  on  our  law?"  Simply  because 
the  common  law  and  the  modern  acts  proceed  on  a 
wholly  different  ethical,  economic  and  legal  basis. 
The  legislator  of  to-day  rejects  the  narrow  view 
that  the  problem  of  industrial  accidents  is  one 
wholly  between  the  parties  to  the  contract  of  em- 
ployment; and  hints  that  its  true  solution  is  to  be 
found  in  saddling  on  the  industry,  as  one  of  the 
necessary  incidents  of  conducting  it,  the  expense  of 
compensating  its  injured  employees  regardless  of 
the  varying  degrees  of  negligence  of  the  parties. 
Workmen's  Compensation  presumes  a  light  in  the 
injured  laborer  to  compensation  for  injuries  re- 
ceived in  the  course  of  his  employment;  but  this 
right  is  no  more  personal  to  the  laborer  than  is  the 
duty  to  pay  personal  to  the  employer.  In  a  given 
case,  the  workman's  negligence  may  be  inexcusable, 
the  employer's  conduct  exemplary;  but  because  in 
the  long  run  it  is  better  for  the  industry  to  bear 
the  brunt  of  industrial  accidents,  because  indi- 
vidual adjudication  of  such  cases  involves  great  ex- 
pense, delay,  and  uncertainty,  the  supporters  of 


UNDERLYING  PRINCIPLES  11 

the  modern  legislation  have  insisted  that  the  law 
shall  make  "the  assumption,  in  all  cases,  that  neither 
party  was  guilty  of  negligence  and  that  the  injury 
was  the  inevitable  result  of  the  occupation  in  which 
the  employee  was  engaged."  15 

The  reader  must  not,  however,  assume  that  the 
principle  of  workmen's  compensation,  which  has 
been  thus  broadly  stated,  operates  to  its  fullest  ex- 
tent in  all  those  jurisdictions  in  which  it  has  been 
adopted.  Indeed,  it  has  been  pointed  out  that  in 
none  of  the  American  states  in  which  a  modern  act 
is  in  force,  does  the  law  cover  all  employments ;  and 
in  all  there  are  limitations  in  the  causes  and  results 
of  injuries  for  which  compensation  will  be 
granted.16  Most  statutes  refuse  compensation 
when  the  accident  is  due  to  the  willful  act  of  the 
employee ; 1T  and  some  make  the  same  rule  in  the 
case  of  intoxication.18  But  these  and  other  excep- 
tions must  not  be  taken  to  impeach  the  theory  on 
which  all  these  acts  are  based;  which  is  that  it  is  in 

16  Bradbury,  Workmen's  Compensation  and  State  Insurance  Law 
(2d  Ed.),  p.  6. 

18  W.  C.  Fisher  in  Quarterly  Journal  of  Economics,  vol.  XXX,  pp. 
22-23.  There  is  a  marked  tendency,  however,  to  do  away  with  these 
limitations.  Rhodes,  Workmen's  Compensation,  p.  135. 

IT  Bradbury,  Workmen's  Compensation  and  State  Insurance  Law 
(2d  Ed.),  pp.  6-7. 

is  Bradbury  (supra),  p.  7;  see  also  New  Jersey  statute  (P.  L. 
1911,  p.  134)  Section  2,  paragraph  7. 


12        WORKMEN'S  COMPENSATION  AND  INSURANCE 

the  interest  of  the  state  and  its  citizens,  to  have 
"the  portion  of  the  cost  of  furnishing  products  and 
services  which  is  represented  by  the  loss  of  time 
through  disabilities  caused  by  accidents  arising  out 
of  the  occupation,  and  by  death  from  such  acci- 
dents of  persons  engaged  in  the  occupation,"  borne 
in  the  first  instance  by  the  employer  and  ultimately 
by  the  consuming  public  in  the  form  of  increased 
prices,  rather  than  by  the  injured  workmen  them- 
selves.19 

^  As  has  been  shown,  the  distinction  between  the 
two  legal  systems  is  a  fundamental  one;  the  com- 
mon-law of  negligence  raising  the  question  of  com- 
parative fault,  while  the  workmen's  compensation 
acts  waive  that  question  entirely,  and  rest  on  the 
broad  proposition  that  public  policy  requires  that 
the  industry  bear  the  burden  of  the  accidents  inci- 
dental to  it.  But,  clear  as  is  the  distinction  in  prin- 
ciple, the  terms  used  to  describe  the  two  theories 
have  been  ambiguous  and  confusing.  "Employers' 
Liability"  is  the  antithesis  of  "Workmen's  Com- 
pensation"; and  the  former  should  be  used  to  de- 
note the  common  law  system,  either  in  its  purity 
or  modified  in  its  details  but  not  its  principles  by 

i>  See  Dawson,  Miles  Menander,  on  The  Constitutionality  of  Work- 
men's Compensation  and  Compulsory  Insurance  Laws,  in  Case  and 
Comment,  voL  22,  at  p.  278  (September,  1915). 


UNDERLYING  PRINCIPLES  13 

"Employers'  Liability  laws,"  as  distinct  from  the 
innovations  of  the  statutes  we  are  discussing.20 
Notwithstanding,  the  two  terms  have  not  infre- 
quently been  used  interchangeably.  The  courts 
themselves  have  taken  notice  of  these  inconsisten- 
cies, however,  and  in  at  least  one  instance  have  sug- 
gested a  change  to  the  more  accurate  term  in  de- 
scribing a  statute. 

Another  phrase  which  is  often  used  and  is  apt  to 
confuse  the  unwary  is  "State  Insurance."  By 
State  Insurance  Laws  are  meant  simply  those 
workmen's  compensation  laws,  or  statutes  of  even 
broader  application,  which  follow  the  German  plan 
of  providing  compensation  for  disabled  workers  by 
means  of  state-managed  insurance  funds,  to  which 
the  employers  (and  sometimes  the  workmen  them- 
selves) contribute  in  the  form  of  premiums.  This 
is  a  form  of  workmen's  compensation  apparently 
increasing  in  popularity,  though  meeting  with  the 
organized  opposition  of  the  private  insurance  com- 
panies.21 

Enough  has  been  said  to  show  that  a  new  prophet 

20  Bradbury,  Workmen's  Compensation  and  State  Insurance  Law 
(1st  Ed.),  at  p.  ix  of  the  Introduction;  Rhodes,  Workmen's  Compen- 
sation, p  3.     See  also   Gregutis   v.   Waclark  Wire  Works,  91   Atl. 
(N.  J.)  98,  for  judicial  view  of  distinction. 

21  See  current  comment  in  The  Weekly  Underwriter,  published  at 


14        WORKMEN'S  COMPENSATION  AND  INSURANCE 

has  arisen  in  Israel;  that  the  attitude  of  our  fore- 
fathers towards  labor,  and  more  especially  towards 
the  problem  of  industrial  accidents,  is  not  the  atti- 
tude of  the  rising  generation.  But  a  theory  is  not 
sound  merely  because  it  is  new.  How  solid  is  the 
economic  basis  on  which  it  rests  ? 

To  begin  with,  the  supporters  of  the  workmen's 
compensation  principle  insist  that  accidents  are 
an  inevitable  incident  of  modern  industry.  In  the 
long  run,  there  will  be  a  "more  or  less  stable  aggre- 
gate of  loss  and  damage  occasioned  by  industrial 
accidents ;  and  this  loss  or  damage  is  as  much  a  part 
of  the  cost  of  the  commodity  produced  as  destruc- 
tion of  material,  wear  and  tear  on  machinery, 
etc." 22  In  reply  to  the  contention  that  "the  work- 
man can  get  relief  by  suing  his  employer,"  the  ad- 
vocates of  the  new  legislation  point  to  the  results 
of  actual  investigations,  like  that  of  the  German 
Government  commission  of  1887,  whose  careful 
statistics  show  that  out  of  every  100  serious  acci- 
dents 43  are  such  as  no  care  on  the  part  of  the  em- 
ployer could  have  prevented.23  In  those  43  cases, 

80  Maiden  Lane,  N.  Y.  The  Workmen's  Compensation  Publicity  Bu- 
reau at  the  same  address  is  avowedly  run  in  the  interests  of  private 
insurance. 

22  Frankel  and  Dawson,  Workingmen's  Insurance  in  Europe,  p.  9. 

23  11  Columbia  Law  Review,  p.  40,  n.  9. 


UNDERLYING  PRINCIPLES  1* 

then,  the  law  of  negligence,  even  under  the  most 
liberal  of  employers'  liability  acts,  would  give  no 
relief;  and  the  burden  would  be  thrown  upon  those 
least  able  to  bear  it — the  injured  workmen  them- 
selves. It  need  hardly  be  added  that  this  means, 
in  the  last  analysis,  that  the  support  of  the  disabled 
laborer  and  his  dependents  is  thrust  upon  the  gen- 
eral community  in  the  form  of  charity.24 

Let  us  put  aside  for  the  moment  whatever  feeling 
of  pity  for  the  unfortunate  workman  and  his  family 
may  be  stirred  in  us  by  the  situation  thus  presented, 
and  consider  it  simply  as  an  economic  problem.  In 
a  given  industry — say  that  of  mining  for  coal — the 
risk  is  unusually  great.  This  is  not  because  of  neg- 
ligence on  the  part  of  the  employers,  who,  wre  will 
presume,  have  spent  much  money  and  put  a  great 
deal  of  thought  into  safety  devices;  but  because 
mining  is  an  inherently  dangerous  occupation. 
Every  year  a  great  number  of  serious  accidents  oc- 
cur; the  injured  miners,  and  the  representatives  of 
those  who  are  killed,  are  constantly  bringing  actions 
against  the  mining  companies.  Sometimes  big  ver- 
dicts are  recovered;  but  oftenest  it  is  impossible  to 
prove  that  the  employers  were  negligent,  and  only 
the  lawyers  profit.  The  situation  is  pitiful;  the 

2*  Frankel  and  Dawson,  Workingmen's  Insurance  in  Europe,  p.  9. 


16       WORKMEN'S  COMPENSATION  AND  INSURANCE 

families  of  disabled  workmen  struggle  on  in  dire 
poverty,  or  drift  to  the  poor-farms,  where  they  are 
a  continuous  expense  to  township  and  county. 

This  picture  represents  more  than  a  social  injus- 
tice; it  reveals  an  economic  fallacy.  That  large 
proportion  of  accidents  which  are  inseparable  from 
the  employment,  yet  for  which  the  law  permits  no 
recovery  against  the  employer,  constitutes  one  of 
the  normal  incidents  in  the  production  of  coal ;  and 
a  sane  economic  policy  dictates  the  assumption  of 
the  expense  of  these  accidents,  not  by  the  impov- 
erished workman,  not  by  the  public  charity  to 
which  the  workman  eventually  turns,  but  by  the 
employers  of  that  industry  in  the  first  instance,  and 
eventually  by  the  consumer  of  the  coal  in  the  form 
of  increased  prices  for  that  commodity.  It  is  for 
the  consumer  of  the  coal,  in  the  final  analysis,  that 
the  miner  toils  and  subjects  himself  to  danger;  and 
since  it  is  the  consumer  who  has  set  the  industry  in 
motion,  it  is  but  right  that  when  he  comes  to  pay 
for  the  product  of  the  miner's  labor  he  shall  include 
in  the  purchase-price  enough  to  compensate  the 
miner  for  the  dangers  he  has  undergone  and  the  in- 
juries he  has  suffered.  Yet  for  many  years  the 
mining  communities,  instead  of  the  particular  group 


UNDERLYING  PRINCIPLES  17 

which  benefits  by  the  production  of  the  coal,  have 
had  to  bear  the  burden  of  the  accidents  incidental 
to  its  production,  in  the  form  of  the  expense  of 
litigation  concerning  these  accidents,  the  care  of  the 
victims,  and  the  many  evils  growing  out  of  the  re- 
sulting distress  and  pauperism.25 

Unsound  in  principle,  the  old  law  did  not  work 
out  well  in  practice.  In  a  few  cases,  injured  work- 
men excited  the  sympathy  of  the  jury  and  recovered 
scandalously  large  verdicts;  but  a  vast  majority  of 
accidents  went  wholly  uncompensated  or  were  met 
with  inadequate  payments.26  It  has  been  esti- 
mated that  the  common-law  remedy  furnished  com- 
pensation of  any  kind  in  not  more  than  12  per  cent, 
of  the  cases  of  injuries  to  employees;  and  even  in 
those  few  cases  of  recovery,  the  amount  paid  aver- 
aged scarcely  one-fifth  of  what  is  deemed  ade- 
quate.27 In  Germany,  before  the  adoption  of  the 
compulsory  insurance  laws,  the  percentage  of  cases 
of  accidents  to  employees  in  which  compensation 
was  awarded  was  even  smaller,  being  barely  ten 
per  cent.28  That  these  percentages  do  not  repre- 

25  See  Dawson,  Miles  Menander,  in  Case  and  Comment,  vol.  22,  p. 
278. 

26  Frankel  and  Dawson,  Workingmen's  Insurance  in  Europe,  p.  7. 

27  Boyd,  Workmen's  Compensation,  p.  54. 

28  Ibid.,  p.  74  . 


18       WORKMEN'S  COMPENSATION  AND  INSURANCE 

sent  the  ratio  of  meritorious  to  undeserving  cases, 
even  approximately,  goes  without  saying. 

Capitalists  and  large  employers  to-day  have 
joined  the  labor  element  in  welcoming  the  compen- 
sation principle.29  Undoubtedly  the  aggregate 
yearly  payments  under  the  compensation  laws  are 
greater  than  formerly  under  the  old  slipshod  sys- 
tem; but  the  terror  of  the  "big  verdict"  is  gone. 
Another  abomination  done  away  with  by  the  acts  is 
the  necessity  of  paying  expensive  attorneys  and 
claim  agents  to  fight  the  claims — an  item  often  of 
greater  magnitude  than  the  whole  amount  paid  as 
damages.30 

But  whether  employers  are  pleased  or  not,  it  is 
likely  that  they  will  have  to  submit  to  workmen's 
compensation  laws,  which,  after  long  delay,  have 
come  like  a  whirlwind  upon  the  United  States,  most 
of  the  states  and  territories  having  adopted  the  prin- 
ciple since  191 1.31  And  as  the  legislation,  and  the 
industries  to  which  it  applies,  gradually  undergo 
the  changes  necessary  to  the  process  of  mutual 
adaptation,  even  the  most  stubborn  of  the  oppo- 

2»  Senate  Document  No.  338,  62d  Cong.,  2d  Sess.,  pp.  551,  1378. 

so  Boyd,  Workmen's  Compensation,  p.  60. 

«i  For  texts  of  the  laws  passed  up  to  the  end  of  1916,  see  Honnold, 
Workmen's  Compensation,  vol.  2.  See  also  digests  and  other  publi- 
cations of  the  Workmen's  Compensation  Publicity  Bureau,  80  Maiden 
Lane,  New  York  City. 


UNDERLYING  PRINCIPLES  19 

nents  of  the  idea  will  be  compelled  grudgingly  to 
admit,  as  did  a  successful  and  conservative  banker 
friend  of  mine,  that  "after  all,  it's  a  better  solution 
of  the  labor  problem  than  the  old  one." 


CHAPTER  II 
THE  RISE  OF  WORKMEN'S  COMPENSATION 

THE  theory  of  workmen's  compensation  is  such  a 
newcomer  to  the  United  States  that  some  study  of 
its  history,  of  how,  why  and  where  it  came  to  be,  is 
essential.  To  an  account  of  the  rise  of  the  compen- 
sation principle,  and  a  description  of  the  form  it  has 
taken  in  foreign  countries,  and  more  especially  in 
Germany  and  England,  this  chapter  is  devoted. 

Switzerland  was  the  first  country  to  declare  that 
for  accidents  in  certain  employments  the  employer 
was  to  be  liable  without  proof  of  fault ; *  but  the 
German  Industrial  Insurance  Act  of  1884  is  con- 
ceded to  have  been  the  first  modern  compensation 
law,2  and  on  the  German  system  most  subsequent 

ill  Columbia  Law  Review,  p.  36.  See  also  Fourth  Special  Report 
of  the  Commissioner  of  Labor,  edited  by  John  Graham  Brooks 
(1893),  p.  354;  and  Frankel  and  Dawson,  Workingmen's  Insurance 
in  Europe,  p.  74.  The  Swiss  law  of  1881  "made  factory  proprietors 
liable  without  fault  for  accidental  injuries  to  their  employees," 
and  included  among  such  injuries  "diseases  caused  by  such  poisonous 
substances  as  should  be  specified  by  the  Federal  Council."  65  Univ. 
of  Penn.  Law  Review,  516-517  (April,  1917). 

2  Bradbury,  Workmen's  Compensation  and  State  Insurance  Law 
(1st  Ed.,  1912),  p.  xii  of  Introduction. 

20 


THE  RISE  OF  WORKMEN'S  COMPENSATION  31 

enactments  have  in  some  degree  been  patterned.3 
It  must  not  be  supposed,  however,  that  in  Germany 
or  anywhere  else  the  compensation  principle  came 
into  being  by  spontaneous  generation;  its  ultimate 
adoption  was  the  culmination  of  a  long  series  of 
legislative  experiments  along  similar  lines,  which  in 
turn  were  the  result  of  gradual  advances  in  the  field 
of  economic  philosophy. 

The  philosophic  influences  which  have  molded 
modern  German  labor  legislation  are  especially  im- 
portant. They  are  very  much  older  than  such 
legislation  itself,  going  back  at  least  to  Hegel, 
Fichte  and  Sismondi,  whose  theories  were  the  in- 
spiration respectively  of  Marx,  Lasalle  and  Winkel- 
blech,  the  three  Socialistic  thinkers  with  whom  the 
rise  of  the  principle  of  compulsory  workmen's  in- 
surance is  indissolubly  associated.  The  theory  of 
the  duty  of  the  state  towards  the  working  class, 
which  Fichte,  writing  at  the  close  of  the  eighteenth 
century,  expounded  with  such  eloquence,  was  taken 
up  and  expanded  by  Sismondi  twenty  years  later; 
and  it  was  the  latter's  disciple,  Professor  Winkel- 
blech  (Karlo  Mario),  who  first  conceived  the  idea 
of  state  insurance  in  Germany.  Another  Socialist, 
Dr.  Schaeffle,  has  been  called  the  father  of  that 

»11  Columbia  Law  Review,  p.  37. 


22       WORKMEN'S  COMPENSATION  AND  INSURANCE 

principle ;  and  it  was  unquestionably  the  sudden  in- 
crease in  the  Socialistic  vote  after  the  Franco-Prus- 
sian War  that  led  Bismarck  to  adopt  the  compul- 
sory insurance  idea.4 

The  Prussian  Act  of  November  3, 1838,  had  con- 
tained the  elements  of  an  employers'  liability  law  of 
narrow  application.  It  provided,  in  substance,  that 
railway  companies  should  be  liable  to  both  em- 
ployees and  passengers  for  injuries  sustained  from 
the  operation  of  the  trains ;  but  it  also  expressly  per- 
mitted the  companies  to  set  up  in  defense  either 
that  the  accident  had  been  caused  by  the  negligence 
of  the  injured  party,  or  that  it  was  due  to  an  act  of 
God.5  The  statute  was  indicative  of  a  broader 
attitude  towards  accidents  to  employees  than  that 
characteristic  of  the  common  law  of  negligence  and 
fault;  but  there  was  as  yet  no  sign  of  acceptance 
of  the  compensation  principle. 

Labor  problems,  however,  continued  to  occupy 
the  attention  of  German  legislators.  In  1854,  cer- 
tain classes  of  employers  in  Prussia  were  compelled 

«  Fourth  Special  Report  (see  footnote  1),  pp.  19-22,  27.  Mr. 
Brooks,  the  author  of  the  report,  makes,  in  Chapter  1,  a  thorough 
examination  into  the  philosophic  basis  of  the  compensation  principle. 
See  also  Rhodes,  Workmen's  Compensation,  pp.  41-45. 

•  Boyd,  Workmen's  Compensation,  p.  26.  Mr.  Boyd  has  an  excel- 
lent historical  summary  of  German  legislation  in  this  book,  on  which 
the  writer  has  freely  drawn  for  information. 


THE  RISE  OF  WORKMEN'S  COMPENSATION  23 

by  statute  to  contribute  one-half  of  the  subscrip- 
tions to  the  fund  of  the  sick  associations  formed 
according  to  local  statutes;  and  Brunswick,  Meck- 
lenburg and  Saxony  went  even  further  in  requiring 
that  all  employers  should  be  members  of  some  kind 
of  mutual  sick  association.6  The  earlier  Prussian 
laws,  however,  do  not  seem  to  have  been  very  effec- 
tive; as,  in  1876,  when  the  law  relating  to  friendly 
and  active  societies  was  passed,  barely  one-half  of 
those  employed  in  mines  and  other  industries  com- 
ing within  the  law  were  insured  in  the  Sickness, 
Relief  and  Burial  Societies  provided  for.7 

The  employers'  liability  act  of  1871,  for  united 
Germany,  related  only  to  mines,  railways,  and  a 
few  other  industries,  and  made  employers  liable 
for  death  or  accident  proved  to  be  directly  or  in- 
directly the  fault  of  the  employer.  Assumption  of 
risk  and  the  fellow-servant  rules  were  done  away 
with  by  this  statute,  which,  however,  caused  so  much 
bitterness  and  involved  so  many  delays  in  the  ad- 
ministration of  justice  that  it  must  be  set  down  as  a 
failure.8 

The  voluntary  insurance  act  of  1876,  to  which  I 

•  Fourth  Special  Report  (supra),  p.  35;  Boyd  (supra),  pp.  26-27. 
See  also  Willoughby,  Workingmen's  Insurance,  pp.  33-34. 

i  Boyd,  Workmen's  Compensation,  p.  27. 

•  Ibid.,  pp.  28,  1180-1181. 


24       WORKMEN'S  COMPENSATION  AND  INSURANCE 

have  already  referred,  also  proved  a  failure,  as  a 
result  of  that  industrial  selfishness  which  is  the  bane 
of  all  such  legislation.9  The  need  of  stronger 
measures,  which  in  operation  would  not  lay  the  bur- 
den on  conscientious  employers  and  exempt  their 
less  altruistic  competitors,  was  pressing;  and  Bis- 
marck set  himself  to  the  solution  of  this  problem 
with  characteristic  energy.  The  compulsory  in- 
surance acts  of  1883-1889,  heralded  by  an  Imperial 
message  to  the  Reichstag  on  November  17,  1881, 
were  the  results  of  his  labors. 

The  scheme  of  these  laws  was  novel  and  compre- 
hensive. By  the  Sick  Insurance  Act  of  June  15, 
1883,  insurance  was  made  compulsory  as  to  work- 
men of  an  earning  capacity  up  to  2,000  marks  a  year 
in  a  large  class  of  industries,  and  voluntary  as  to  the 
exempted  workmen,  officials  and  servants.  It  was 
to  be  carried  out  by  means  of  local  associations,  es- 
tablished by  trade  guilds,  townships,  factories,  or 
other  industrial  units;  these  were  mutual,  self -ad- 
ministered organizations,  to  whose  insurance  funds 
workmen  and  employers  contributed  in  a  ratio  of 
two  to  one.  The  relief  to  which  the  insured  were 
entitled  consisted  in  free  medical  attendance  from 
the  beginning  of  the  illness,  including  medicines, 

•  Fourth  Special  Report  (supra),  p.  46. 


THE  RISE  OF  WORKMEN'S  COMPENSATION  25 

bandages,  etc.,  and  a  sick  pay  equal  to  one-half  of 
the  insured's  wages  for  a  limited  period,  first  set 
at  13  weeks.  In  addition,  special  hospital  treat- 
ment was  provided  for  in  particular  cases,  and 
burial  money  in  the  case  of  death.10 

Accident  Insurance  (as  distinguished  from  Sick 
Insurance)  was  covered  by  the  following  enact- 
ments: (1)  the  "fundamental  law,"  often  re- 
ferred to  as  the  first  modern  compensation  act,  of 
July  6,  1884,  which  applied  to  mines,  quarries,  ex- 
cavations, factories,  and  in  general  the  handicrafts 
using  machines  and  some  underground  building; 
(2)  the  "extension  law,"  extending  the  principle 
of  the  former  act  to  the  transport  trades  within  the 
country,  including  the  post,  telegraph,  army  and 
navy;  (3)  the  "agricultural  law"  of  May  5,  1886, 
for  Agriculture  and  Forestry;  (4)  the  "building 
law"  of  July  11,  1887,  for  building  trades  so  far 
not  insured;  (5)  the  Marine  Law  of  July  13,  1887, 
for  Navigation. 

It  will  be  seen  that  the  general  plan  of  this  legis- 
lation was  to  provide  a  special  set  of  rules  adapted 
to  each  particular  province  of  insurance.  As  re- 
vised in  1900,  it  consisted  of  four  separate  laws, 

ioBoyd,    Workmen's    Compensation,    pp.    1175-1180;    WiUoughby, 
"Workingmen's  Insurance,  p.  41. 


26       WORKMEN'S  COMPENSATION  AND  INSURANCE 

relating  to  (1)  Industry;  (2)  Agriculture  and  For- 
estry; (3)  Building;  (4)  Navigation.  The  scheme 
is  carried  out,  much  as  in  the  case  of  the  sickness 
insurance,  "under  the  guarantee  of  the  Empire,  on 
the  mutual  system,  hy  the  employers  united  in 
trade  associations,  which  may  embrace  all  the  sev- 
eral branches  of  industry  in  certain  districts  or  in 
the  whole  empire."  1 1  The  provisions  of  the  law 
relating  to  Industry  are  of  primary  interest  in  our 
study,  and  will  first  be  briefly  considered. 

The  Act  is  made  applicable  to  employers  and 
officials  whose  incomes  are  not  above  2,000  marks 
per  annum,  as  well  as  to  workers  in  mines,  quarries, 
factories,  etc.;  and  a  number  of  other  classes  may 
be  included  by  the  peculiar  law  of  the  particular 
German  state  or  may  voluntarily  join  the  insur- 
ance. Workmen  and  employers  contribute  to  the 
fund,  which  is  used  for  the  payment  of  compensa- 
tion as  in  the  case  of  the  Sickness  insurance. 

From  the  beginning  of  the  fourteenth  week  after 
the  occurrence  of  an  accident  incurred  in  the  course 
of  the  employment  (when  the  sickness  insurance 
would  expire)  the  injured  workman,  if  totally  dis- 
abled, is  given  free  medical  attendance  and  a  pen- 
sion equal  to  two-thirds  of  his  yearly  earnings;  if 

"Boyd  (supra),  pp.  1182-1183. 


THE  RISE  OF  WORKMEN'S  COMPENSATION  27 

only  partially  disabled,  the  pension  is  only  par- 
tial.12 Burial  money  and  a  pension  for  the  family 
in  the  case  of  death  are  also  provided  for;  and  the 
normal  payments  mentioned  above  are  likely  to  be 
increased  to  a  full  pension  or  given  in  a  lump  sum 
if  the  total  disability  takes  the  form  of  absolute 
helplessness,  or  the  injury  was  caused  intentionally 
by  the  employer.13 

Some  other  points  of  the  plan  are  worthy  of 
notice.  For  example,  during  the  first  thirteen 
weeks  of  disability,  known  as  the  waiting  period, 
the  employer  was  liable  for  the  injured  man's  sup- 
port in  case  the  sick  associations  failed  to  provide 
for  him ;  though  this  has  now  been  altered.14  From 
the  decision  of  the  trade  association  on  the  validity 
of  a  claim  under  the  act,  there  was  an  appeal,  orig- 
inally to  the  imperial  bureau,  and,  after  1901,  to  a 
special  arbitration  court.15  And  since  the  trade 
associations  have  a  decided  interest  in  diminishing 
the  number  of  accidents,  the  law  confers  on  them 
the  important  privilege  of  prescribing  safety  regu- 

12  Fourth  Special  Report  (supra),  pp.  90-91;  Willoughby  (supra), 
p.  60;  Dawson,  Social  Insurance  in  Germany,  p.  113. 

isBoyd  (supra),  pp.  1184^1185;  Willoughby  (supra),  p.  60. 

i*Boyd  (supra),  p.  1185. 

is  Ibid.  Mr.  Brooks,  in  the  Fourth  Special  Report  (supra),  writ- 
ing in  1893,  says  that  one-sixth  of  the  decisions  of  the  trade  asso- 
ciations were  appealed  to  the  imperial  bureau  (at  p.  93). 


28       WORKMEN'S  COMPENSATION  AND  INSURANCE 

lations,  infringements  of  which  they  may  punish  by 
higher  assessments  on  employers  or  fines  on  work- 


men.16 


The  Agricultural  Insurance  Law,  which  applies 
to  Forestry  as  well,  differs  somewhat  from  the  In- 
dustrial Insurance  Law  in  its  methods  of  operation. 
The  agricultural  trade  associations  are  organized 
by  territorial  districts,  made  to  coincide  with  com- 
munal or  provincial  boundaries.  These  bodies,  at 
their  assemblies,  levy  contributions  for  the  insur- 
ance fund,  on  the  basis  of  taxes;  and  the  compen- 
sation paid,  except  in  the  cases  of  skilled  workmen 
or  managing  officials,  is  based  on  the  average  rate 
of  wage  for  agricultural  laborers,  rather  than  actual 
earning  power.  Furthermore,  during  the  "wait- 
ing-time," the  parish,  instead  of  the  employer,  is 
required  to  make  preliminary  provision  for  the  in- 
jured laborer. 

Under  the  Building  Trades  Accident  Insurance 
Law  and  the  Marine  Accident  Insurance  Law  the 
compensation  is  administered  by  "insurance  insti- 
tutions" established  as  appendages  to  the  several 
associations.  In  the  case  of  small  marine  enter- 
prises, a  special  "Insurance  Institution"  is  provided, 
to  which  masters  of  small  craft  employing  regu- 

10  Fourth  Special  Report  (supra),  p.  95. 


THE  RISE  OF  WORKMEN'S  COMPENSATION  29 

larly  not  more  than  two  wage- workers  are  subject; 
the  compensations  being  raised  by  premiums  and 
contributed  to  by  the  larger  parish  unions.17 

Another  form  of  state  insurance  provided  for  in 
Germany,  and  important  in  this  connection  because 
it  forms  one  of  the  chief  branches  of  the  consolidat- 
ing act  of  1911,  is  Invalidity  and  Old  Age  Insur- 
ance. It  was  first  established  by  a  statute  approved 
on  June  22,  1889,18  and  was  replaced  ten  years 
later,  after  about  eight  and  one-half  years  of  actual 
operation,  by  the  act  of  July  13,  1899.  Persons 
working  for  wages  in  any  branch  of  trade,  manag- 
ing officials  such  as  foremen  and  engineers,  clerks, 
apprentices,  teachers  and  tutors,  and  some  other 
employees,  are  compelled  to  insure;  masters  em- 
ploying only  one  or  two  workmen,  employees  with 
yearly  earnings  in  excess  of  2,000  marks  and  less 
than  3,000,  and  those  who  work  only  occasionally 
or  for  maintenance,  are  allowed  to  join  the  insur- 
ance voluntarily.  The  object  of  the  law  is  to  give 
the  insured  a  legal  claim  to  a  pension  for  invalidity 
or  old  age.  Its  benefits  may  be  invoked  by  every 
insured  person  who  is  permanently  disabled,  irre- 

17  Boyd,  Workmen's  Compensation,  p.  1193. 

is  Fourth   Special  Report    (supra),  p.   116;  Willoughby    (supra), 
p.  36;  Dawson,  Social  Insurance  in  Germany,  p.  19. 


30        WORKMEN'S  COMPENSATION  AND  INSURANCE 

spective  of  age;  and  without  proof  of  disability  by 
insured  persons  who  have  completed  their  seven- 
tieth year.  Contributions  to  the  fund  are  furnished 
by  the  Empire,  the  employers  and  the  employed, 
jointly.  Pensions  are  administered  by  special  In- 
surance Institutions,  which  are  corporations  whose 
responsibility  is  guaranteed  by  the  state.19  The 
amounts  are  considerably  smaller  than  the  compen- 
sation provided  for  by  the  accident  insurance  laws, 
but  there  is  a  good  explanation  of  this  in  the  fact 
that  gradual  decline  in  bodily  vigor  is  an  inevitable 
occurrence  against  which  every  prudent  man  is 
bound  to  provide,  while  sudden  industrial  accidents 
upset  all  calculations.20 

The  three  great  branches  of  state  insurance  which 
we  have  described — Sickness,  Accident,  and  In- 
validity— were  consolidated  into  the  German 
Workmen's  Insurance  Code  by  the  act  of  July  19, 
1911.  This  statute  is  essentially  a  codification,  and 
carries  out  the  scheme  of  the  individual  acts  even 
to  the  retention  of  separate  administrative  bodies 
to  conduct  the  three  branches.  "Survivors'  Insur- 
ance" to  protect  widows  and  orphans  is  a  new  fea- 
ture; so  is  the  introduction  of  a  series  of  govern- 
ment offices  to  supervise  the  insurance  organ- 
it  Boyd  (supra),  p.  1200.  "Ibid.,  p.  1203. 


THE  RISE  OF  WORKMEN'S  COMPENSATION  31 

izations;  but  in  the  main  the  changes  have  been  in 
the  nature  of  a  harmonizing  and  extension  of  the 
provisions  of  the  former  acts  rather  than  the  in- 
troduction of  new  matter.  The  act  represents  the 
existing  law  in  the  Empire  on  the  subject;  and  it 
may  be  mentioned,  as  characteristic  of  German 
thoroughness  and  genius  for  detail,  that  a  trans- 
lation of  its  provisions  fills  nearly  300  pages  of  fine 
print  in  a  generous  American  law-book.21 

The  German  Compulsory  State  Insurance  Law 
has  been  called  "the  boldest  experiment  in  social 
legislation  ever  attempted."  It  represents  the 
most  complete  development  yet  attained  along  the 
line  of  Workingmen's  Insurance,  and  has  served  as 
a  model  for  legislation  in  several  American  states. 
In  the  writer's  opinion,  it  comes  nearer  to  the  ideal 
law  than  any  in  force  elsewhere.  But  state  insur- 
ance is  too  near  state  socialism  to  meet  with  uni- 

21  Pages  1227-1500  in  Mr.  Boyd's  treatise.  An  excellent  review  of 
the  statistics  available  just  before  the  outbreak  of  the  Great  War, 
with  deductions  therefrom  as  to  the  desirability  of  the  German  sys- 
tem, is  to  be  found  in  The  Market  World  and  Chronicle,  vol.  93, 
pp.  814-819  (June  27,  1914).  The  author  of  the  article  comes  to 
the  conclusion  that  German  Industrial  Insurance  is  not  actuarially 
solvent  owing  to  insufficient  provision  for  reserves;  and  also  com- 
ments on  the  "pension  hysteria"  resulting  from  the  too  liberal  awards 
made  prior  to  1908.  Neither  of  these  criticisms,  in  the  opinion  of  the 
present  writer,  condemns  the  state  insurance  project,  though  indi- 
cating possible  improvements  in  details. 


39       WORKMEN'S  COMPENSATION  AND  INSURANCE 

versal  acceptance.  Though  it  cannot  but  be  recog- 
nized that  the  principle  of  workmen's  compensation 
— of  liability  of  the  employer  for  injuries  to  the 
employee  without  regard  to  comparative  negligence 
— can  only  be  made  thoroughly  practical  in  opera- 
tion by  the  use  of  some  system  of  insurance,  many 
commonwealths  have  preferred  to  leave  this  prob- 
lem to  be  worked  out  by  voluntary  associations. 
Compensation  laws  in  these  jurisdictions  affirm  the 
principle  of  the  right  of  the  injured  workman  to 
some  indemnity  from  the  employer,  prescribe  the 
amounts  to  be  paid  and  the  method  of  administra- 
tion, but  are  silent  as  to  how  employers  and  work- 
men shall  contrive  that  the  compensation  shall  al- 
ways be  forthcoming  without  undue  shock  to  the 
financial  stability  of  the  industry.  The  typical 
statute  of  this  nature,  and  one  which,  like  the  Ger- 
man law,  has  served  as  a  model  for  many  American 
acts,  is  that  now  in  operation  in  England. 

In  England,  as  in  Germany,  the  development  of 
the  workmen's  compensation  principle  was  grad- 
ual. The  fellow-servant  rule,  though  well  estab- 
lished after  Priestley  v.  Fowler,22  had  not  been 
popularly  supposed  to  extend  to  cases  where  the 
fellow-workman  was  of  a  higher  rank  and  prac- 

223  M.  &  W.  1   (1837). 


DEC  7-  1918 

THE  RISE  OF  WORKMEN'S  COMPENSATION  33 

tically  acting  in  the  place  of  the  master.  But  in 
Wilson  v.  Merry,  in  1868,  the  House  of  Lords 
pushed  the  doctrine  to  its  utmost  limits.  In  that 
case  the  plaintiff's  son,  a  miner,  was  killed  by  an 
explosion  of  fire-damp  which  had  accumulated  ow- 
ing to  defects  in  a  staging  which  had  been  erected 
by  the  defendant's  superintendent,  a  competent 
man.  In  holding  that  the  plaintiff  could  not  re- 
cover, Lord  Cr  an  worth  said:  "Workmen  do  not 
cease  to  be  fellow-workmen  because  they  are  not  all 
equal  in  point  of  station  or  authority."  23 

After  this  case,  the  imperative  necessity  of  some 
statutory  modification  of  the  common-law  became 
apparent.  A  rule  so  narrow  would  prevent  re- 
covery in  most  cases  of  servants  of  corporations, 
since  the  negligence  would  almost  of  necessity  be 
that  of  another  servant  of  the  corporate  entity. 
And  it  was  really  to  undo  the  mischief  caused 
by  the  sweeping  language  used  in  Wilson  v.  Merry 
that  the  Employers'  Liability  Act  of  1880  was 
passed.24 

The  Act  of  1880,  like  the  subsequent  broader 
statute  of  1897,  was  the  work  of  Joseph  Chamber- 
as  L.  R.  1  H.  L.  (Scotch)  326  (1868).     At  p.  334. 
24  Dawbarn,    Employers'   Liability    and   Workmen's   Compensation 
(4th  Ed.),  p.  5. 


34       WORKMEN'S  COMPENSATION  AND  INSURANCE 

lain.25  Framed,  as  it  was,  with  an  eye  to  securing 
the  political  support  of  both  manufacturers  and 
workmen,  it  is  in  no  sense  a  radical  measure.  It 
creates  no  new  cause  of  action,  but  leaves  the  work- 
man to  sue  for  damages  as  before ;  and  in  such  a  suit 
the  employer  is  permitted  to  set  up  the  same  de- 
fenses as  at  common-law,  except  that  the  accident 
was  due  to  the  negligence  of  a  fellow- servant.  This 
abolition  of  the  "defense  of  common  employment," 
or  (as  we  have  termed  it)  the  fellow-servant  rule, 
is  the  one  outstanding  feature  of  the  whole  piece  of 
legislation.28 

The  Employers'  Liability  Act  unquestionably 
brought  about  an  improvement  in  the  labor  sit- 
uation in  England.  But  it  had  the  inherent  weak- 
nesses of  a  measure  of  narrow  application.  To  be- 
gin with,  it  covered  only  a  limited  range  of 
employments,  and  these  were  arbitrarily  selected. 
Against  purely  collateral  negligence  of  a  workman 
in  the  same  grade  of  employment,  it  did  not  pro- 

25  For  the  source  of  this  and  other  historical  data  with  regard  to 
the  development  of  the  Workmen's  Compensation  principle  in  Eng- 
land, see  the  comprehensive  work  of  Mr.  Dawbarn  (supra),  and  an. 
excellent  article  by  J.  G.  Pease  in  15  Columbia  Law  Review  509- 
523  (June,  1915)  entitled  "An  English  Workman's  Remedies  for 
Injuries  Received  in  the  Course  of  His  Employment,  at  Common-law 
and  by  Statute." 

»«Tillyard,  Industrial  Law,  p.  104. 


THE  RISE  OF  WORKMEN'S  COMPENSATION  35 

tect.  And  the  causes  of  injury  to  which  the  Act 
applied  were  specified  with  too  great  precision;  a 
workman  with  a  meritorious  cause  of  action  was  apt 
to  fail  through  mere  inability  to  bring  himself 
within  the  strict  provisions  of  the  act.27  These  de- 
fects, and  the  growing  popular  demand  for  some 
simple  scheme  by  which  the  workman's  claims  could 
be  settled  without  resort  to  prolonged  and  expensive 
litigation,  led  to  the  government's  definitely  com- 
mitting itself  to  workmen's  compensation  in  1897. 

The  new  law  bound  employers  in  a  wide  range 
of  industries  to  pay  to  such  of  their  workmen  as 
should  be  injured  by  an  accident  arising  out  of  and 
in  the  course  of  the  employment,  compensation 
upon  a  scale  fixed  by  the  act.  Disputes  as  to  the 
amount  of  compensation  payable  were  to  be  sub- 
mitted to  arbitration,  with  a  right  of  appeal  to  the 
higher  courts.  The  language  of  the  act  was  simple 
and  direct;  but  that  very  unlawyer-like  simplicity 
was  the  cause  of  much  confusion,  and  the  reports 
are  full  of  cases  in  which  the  legal  significance  of 
apparently  lucid  phrases  is  discussed  at  length.28 

Several  amending  acts  followed  the  passage  of 
the  Act  of  1897,  and  finally,  in  1906,  it  was  re- 

27  Pease  (see  footnote  25),  pp.  514-515. 

28  Pease  (supra),  p.  516. 


36       WORKMEN'S  COMPENSATION  AND  INSURANCE 

pealed,  and  its  main  provisions  reenacted  with  va- 
rious amendments  extending  its  benefits  to  classes 
of  workmen  not  covered  by  the  preceding  statutes. 
It  will  be  well  worth  while  to  consider  briefly  the 
main  provisions  of  this  act  of  1906,  which  has  been 
so  widely  discussed  and  so  frequently  copied. 

To  begin  with,  the  Act  makes  the  right  to  com- 
pensation a  statutory  incident  of  the  contract  of 
service ;  in  a  sense,  it  puts  the  master  in  the  position 
of  an  insurer  against  accident,  though  payment  of 
premiums  and  other  indicia  of  insurance  are  lack- 
ing. The  master's  negligence  is  wholly  imma- 
terial.29 

For  practical  purposes,  the  statute  is  divided  into 
three  parts :  ( 1 )  the  Act  itself,  which  deals  mainly 
with  the  question  of  liability  for  compensation;  (2) 
Schedule  I,  which  prescribes  how  the  compensation 
is  to  be  assessed  and  disposed  of;  and  (3)  Schedule 
II,  dealing  with  the  procedure  to  be  adopted.30 
The  first  of  these  topics  is  of  infinitely  the  greatest 
importance  for  the  purposes  of  our  study. 

A  very  wide  range  of  employments  is  covered  by 
the  Act.  Any  person  who  has  entered  into  or 
works  under  a  contract  of  service  or  apprentice- 

2»  Pease  (supra),  p.  517. 
•oDawbarn  (supra),  pp.  85-86. 


THE  RISE  OF  WORKMEN'S  COMPENSATION  37 

ship,  express  or  implied,  either  by  way  of  manual 
labor,  or  any  sort  of  labor  attended  with  a  remuner- 
ation of  less  than  £250  a  year,  is  entitled  to  claim 
its  benefits;  save  that  a  few  groups,  such  as  the 
police,  some  casual  workers,  and  workers  who  hap- 
pen to  be  members  of  the  employer's  family,  are 
excluded  from  its  operation.31  Compensation,  nor- 
mally in  the  form  of  a  weekly  sum  during  the  pe- 
riod of  total  or  partial  incapacity,  is  required  to  be 
paid  whenever  "personal  injury"  by  accident  aris- 
ing out  of  and  in  the  course  of  the  employment  is 
caused  to  a  workman.32  In  the  case  of  death  from 
such  an  accident,  the  workman's  dependents  are  en- 
titled to  a  sum  proportioned  to  his  earnings,  but  not 
in  excess  of  £300.33 

The  master's  liability  to  pay  compensation  under 
the  Act  of  1906  arises  whenever  the  claimant,  a 
"workman"  within  the  meaning  of  the  Act,  has  suf- 
fered injury  "by  accident  arising  out  of  and  in  the 
course  of"  his  employment.  Clearly,  then,  the  in- 
jury, to  be  one  under  this  statute,  must :  ( 1 )  be  by 
an  accident;  (2)  arise  out  of  the  employment;  (3) 

si  Pease  (supra);  also  Boyd,  Workmen's  Compensation,  p.  1131. 
"Workman"  is  denned  by  Section  XIII  of  the  Act,  which  limits  the 
word  as  indicated  above;  special  limitations  on  the  application  of 
the  Act  are  also  to  be  found  in  Sections  VII  and  IX. 

32  Section  I,  subdivision  1  of  the  Act  of  1906  (6  Ed.  7,  ch.  58). 

83  Pease  (supra),  p.  516. 


38       WORKMEN'S  COMPENSATION  AND  INSURANCE 

arise  in  the  course  of  the  employment.  And  if  any 
one  of  these  tests  is  not  met,  the  claimant  fails  to 
establish  his  right  to  compensation.  These  phrases 
were  the  subject  of  much  argument  and  speculation 
in  the  infancy  of  the  act,  but  their  meaning  is  now 
pretty  definitely  settled.84 

The  word  "accident"  has  been  construed  with 
great  liberality  by  the  English .  courts.  The  defi- 
nition most  generally  accepted  is  that  of  Lord 
Macnaghten  in  Fenton  v.  Thorley  &  Company,, 
Ltd.,35  to  the  effect  that  "accident"  is  used  (in  the 
act  of  1897)  "in  the  ordinary  and  popular  sense 
of  the  word  as  denoting  an  unlooked-for  mishap  or 
an  untoward  event  which  is  not  expected  or  de- 
signed." It  follows  that  mishaps  caused  by  the 
negligence  of  the  injured  man,  as  well  as  those  for 
which  no  one  can  be  held  responsible,  may  consti- 
tute injury  by  accident;  and  so  it  was  held  in  the 
Thorley  case.  Even  where  the  injury  is  designedly 
caused  by  some  person  other  than  the  injured  man, 
it  is  an  accident  as  to  the  victim,  who  neither  de- 
signed nor  expected  it;  and  such  was  the  opinion 
of  the  House  of  Lords  in  the  case  of  Trim  Joint 
District  School  v.  Kelly,36  where  the  death  of  a 

»<  Pease  (supra),  p.  517. 

»6  (1903)  Appeals  Cases  443,  at  p.  448. 

««  (1914)  A.  C.  667. 


THE  RISE  OF  WORKMEN'S  COMPENSATION  39 

schoolmaster  caused  by  deliberate  and  intentional 
violence  on  the  part  of  his  pupils  was  held  an  "acci- 
dent." But  an  accident  must  be  something  fortui- 
tious,  some  mishap  occurring  at  a  definite  time  and 
place;  so  injuries  to  the  health  resulting  from  ordi- 
nary wear  and  tear  of  work,  or  a  gradual  under- 
mining of  the  constitution  due  to  the  nature  of  a 
man's  occupation,  do  not  come  within  the  category 
of  accident.37 

The  Act  of  1906,  however,  is  not  confined  to  the 
field  of  "accidental  injury"  as  that  phrase  has  been 
interpreted  by  the  courts.  Section  VIII  extends 
its  benefits  to  cases  of  death  or  disablement  by  cer- 
tain specified  industrial  diseases,  to  which  workers 
in  particular  processes  are  peculiarly  liable.  In  the 
Schedule  attached  to  the  Act  these  industrial  dis- 
eases are  specified  as  anthrax,  lead,  mercury,  phos- 
phorus and  arsenic  poisoning  and  their  sequelae,  and 
ankylostomiasis ;  but  the  power  given  by  subsection 
(c)  to  the  Secretary  of  State  to  extend  this  list 
has  been  repeatedly  exercised.38  The  arbitrary 
specification  of  these  diseases  as  "accidental"  causes 
of  injury  does  not  prevent  a  claimant  suffering 
from  a  disease  not  specified  from  suing  on  the 

3"  Pease  (supra),  p.  518. 

asDawbarn  (supra),  pp.  225-259;  65  Univ.  of  Penn.  Law  Review, 
535-526   (April,  1917). 


40       WORKMEN'S  COMPENSATION  AND  INSURANCE 

theory  that  his  injury  was  in  fact  due  to  the  "acci- 
dent" of  his  having  been  subjected  to  infection  by 
that  particular  disease,  as  was  successfully  done  be- 
fore the  passage  of  the  section  in  the  case  of  anthrax 
and  some  other  diseases.39 

"Arising  out  of  and  in  the  course  of  the  employ- 
ment" has  also  been  given  a  very  liberal  construc- 
tion by  the  British  courts.  As  has  been  pointed  out 
by  a  keen  observer,  the  first  half  of  the  phrase  ex- 
presses the  only  essential  element.  A  just  concep- 
tion of  the  underlying  principles  of  workmen's  com- 
pensation requires  that  the  employer  be  held  liable 
only  for  the  results  of  accidents  arising  "out  of" 
the  employment;  but  there  is  no  reason  why  com- 
pensation should  be  restricted  to  cases  of  injury 
sustained  strictly  "in  the  course  of"  the  same.40  As 
a  result,  this  part  of  the  phrase  has  been  practically 
nullified  by  the  broad  construction  put  upon  it  by 
the  English  courts.  Thus,  the  "course  of  the  em- 
ployment" has  been  construed  to  include  riding  to 
and  from  work  in  the  master's  conveyance,41  or  in 
a  public  conveyance  by  understanding  with  him,42 

s»Higgins  v.  Campbell  &  Harrison  (1904),  1  K.  B.  328. 
4030  Quarterly  Journal  of  Economics,  p.  30. 

41  Mole  v.  Wadsworth,  6  Butterworth's  Workmen's  Compensation 
Cases  129. 

42  Holmes  v.  Great  Northern  By.  Co.,  2  Workmen's  Compensation 
Cases  19. 


THE  RISE  OF  WORKMEN'S  COMPENSATION  41 

waiting  at  the  station  for  a  train,43  eating  noon 
luncheon  on  the  employer's  premises,44  going  for 
pay  even  outside  of  regular  working  hours,45  even 
going  for  a  Sunday  visit  to  one's  wife,46  and  in  one 
remarkable  case  going  to  a  public-house  for  a  glass 
of  beer.47  In  short,  a  man  has  been  held  to  be  in 
the  course  of  his  employment  "not  only  while  he  is 
actually  at  work,  but  while  he  is  at  any  place  where 
he  was  required  to  be  by  the  terms  of  his  employ- 
ment, before  or  after  his  actual  working  time  and 
during  cessation  of  work  for  a  necessary  purpose, 
or  even  in  legitimate  intervals  of  leisure."  48  And 
he  may  still  be  acting  "in  the  course  of"  his  employ- 
ment if,  in  an  emergency,  he  goes  outside  his  proper 
work,  and  to  protect  his  master's  interest  does  some- 
thing wholly  without  the  scope  of  that  employ- 
ment. 

Whether  an  accident  arises  "out  of"  the  employ- 
ment, however,  may  be  a  perplexing  and  is  always 
an  important  question.  The  essence  of  the  re- 
striction is  that  the  accident  must  have  some  rela- 
tion to  the  employment.  But  its  application  is  at- 

43  Cremins  v.  Guest,  1  B.  W.  C.  C.  160,  1  K.  B.  469. 

44  Blovelt  v.  Sawyer,  6  W.  C.  C.  16. 

45  Lowry  v.  Sheffield  Coal  Co.,  1  B.  W.  C.  C.  I. 
*6  Richardson  v.  Morris,  7  B.  W.  C.  C.  130. 

47  Martin  v.  Lovibond  &  Sons,  7  B.  W.  C.  C.  243. 
«  Pease  (supra),  p.  519. 


43       WORKMEN'S  COMPENSATION  AND  INSURANCE 

tended  with  considerable  difficulty.  Where  the 
accident  is  caused  directly  by  what  the  workman  is 
employed  to  do,  by  the  condition  of  the  machinery 
or  premises,  the  situation  is  clear  enough;  but 
where  some  outside  agency,  such  as  an  assault,  sun- 
stroke, lightning,  the  negligence  of  a  party  not  con- 
nected with  the  employment,  brings  about  the  in- 
jury, the  courts  are  often  much  puzzled.  "The 
proper  test  to  apply  in  these  cases,"  says  Mr.  J.  G. 
Pease  in  a  recent  article,  "is  whether  the  nature  of 
the  employment  or  the  place  where  it  is  carried  on 
involves  more  than  ordinary  risk  of  accidents  of  this 
kind." 49 

Accordingly,  it  was  held  that  where  a  cashier  was 
murdered  by  robbers,  his  death  was  due  to  a  risk 
arising  out  of  the  employment,  since  the  generally 
known  fact  that  he  carried  large  sums  about  him 
involved  him  in  more  than  ordinary  risk  of  attack.50 
So,  where  a  workman  stationed  on  a  high  scaffold- 
ing was  struck  by  lightning,  a  recovery  was  per- 
mitted on  the  ground  that  the  nature  of  his  employ- 
ment exposed  him  to  more  than  ordinary  danger 
from  the  elements.51  And  a  foreman  of  a  furni- 

« Ibid.,  p.  520. 

BoNisbet  v.  Rayne  &  Burn  (1910),  2  K.  B.  6R9. 
5i  Andrew  v.  Falesworth  Industrial  Society,  Ltd.  (1904),  2  K.  B. 
32. 


THE  RISE  OF  WORKMEN'S  COMPENSATION  43 

ture-moving  concern  who  was  assaulted  by  a  man 
who  wished  to  hire  a  van  and  was  told  they  were  all 
out,  was  held  to  have  suffered  an  injury  "arising 
out  of  and  in  the  course  of"  his  employment.52 

But  where  an  engine-driver  left  his  engine  and 
crossed  a  siding  for  his  own  purposes,  and  on  the 
return  was  killed  by  a  wagon  being  shunted,  the 
accident  did  not  arise  "out  of  and  in  the  course  of" 
his  employment,  according  to  an  interesting  case.53 
Again,  a  mine-collier  left  his  special  stall  to  ascer- 
tain the  time,  and  was  killed  by  a  fall  of  the  roof  on 
his  way  back ;  the  court  found  here  that  he  had  not 
gone  to  see  the  time  in  the  interests  of  his  employers, 
and  so  the  injury  did  not  arise  "out  of"  the  employ- 
ment.54 Nor  can  an  assault  by  fellow-workmen  in- 
duced by  mere  personal  animosity  be  said  to  arise 
out  of  the  employment,  and  it  was  so  held.55 

The  extremely  liberal  construction  of  the  courts 
has,  as  we  have  seen,  made  possible  a  recovery  of 
compensation  by  the  injured  employee  in  a  large 
proportion  of  cases.  But  the  Act  has  left  to  the 
master  the  defense  that  the  accident  resulted  from 

62Weekes  v.  Stead  &  Co.  (1914),  7  B.  W.  C,  C.  398. 

63  Reed  v.  Gt.  Western  Ry.,  Stone's  Insurance  Cases,  no.  2058, 
(1909)  A.  C.  31. 

B*  Warren  v.  Headley's  Colliery  Co.,  Stone's  Insurance  Cases,  no* 
2065. 

BO  Fitzgerald  v.  Clarke  &  Son  (1908),  2  K.  B.  32. 


44       WORKMEN'S  COMPENSATION  AND  INSURANCE 

the  "serious  and  willful  misconduct"  of  the  work- 
man.56 Unnecessary  and  deliberate  disobedience 
of  orders  is  usually  held  to  be  within  this  provi- 
sion,57 the  judicial  interpretation  of  which  has  been 
exceedingly  fair  and  reasonable.  Such  an  act  as 
that  of  a  boy  in  running  in  front  of  an  express  train 
out  of  pure  bravado,B7a  or  of  a  miner  in  deliberately 
walking  along  a  main  haulage  road  on  which  a  train 
of  coal  trams  was  in  motion,  instead  of  taking 
refuge  in  a  manhole,58  will  defeat  recovery  under 
the  Act ;  but  mere  disobedience  of  a  trifling  regula- 
tion is  not  "unnecessary  and  deliberate"  so  as  to 
constitute  serious  and  willful  misconduct.59 

Possible  complications  arising  out  of  the  practice 
of  sub-contracting  are  provided  against  by  Section 
IV  of  the  Act.  A  workman  is  entitled  always  to  be 
compensated  by  his  own  master ;  but  in  cases  where 
a  third  party  as  principal  has  contracted  with  that 
master  to  have  the  latter  perform  the  whole  or  part 
of  work  undertaken  by  the  principal,  and  injuries 
to  the  workman  occur  during  the  prosecution  of 
such  work  in  the  course  of  and  for  the  purpose  of  the 

B6  Section  I,  paragraph  2. 
BTDawbarn  (supra),  p.  142. 
B7a  Ibid. 

»8  John  v.  Albion  Coal  Co.,  18  T.  L.  R.  27  (1901 Y. 
B»  Johnson  v.  Marshall,  (1906)  A.  C.  409;  M'William  v.  Ry.  Co.,  7 
B.  W.  C.  C.  875. 


THE  RISE  OF  WORKMEN'S  COMPENSATION  45 

principal's  trade  or  business,  happening  on  or  in  or 
about  the  premises  where  he  had  undertaken  to  ex- 
ecute the  work,  or  which  were  otherwise  under  his 
control  or  management — in  these  cases,  the  work- 
man is  entitled  to  recover  against  the  principal.  A 
man  is  not  liable  when  in  his  private  life,  or  for  any- 
thing apart  from  his  trade  or  business,  he  contracts 
with  another  to  have  work  done  for  himself;  his 
responsibility  is  limited  to  the  instances  enumerated. 
It  is,  of  course,  in  cases  where  his  immediate  em- 
ployer, the  sub-contractor,  is  financially  weak,  that 
the  workman  will  most  often  elect  to  claim  compen- 
sation from  the  principal.60 

A  final  point  to  be  noted  in  connection  with  the 
Act  of  1906  is  the  choice  of  remedies  which  a  work- 
man under  some  circumstances  has.  The  Em- 
ployers' Liability  Act  of  1880  was  not  repealed  by 
either  of  the  subsequent  more  radical  measures;  so 
if  a  factory  laborer  to-day  is  injured  by  reason  of  a 
defect  in  the  condition  of  the  plant  or  machinery  due 
to  the  personal  negligence  of  the  employer,  he  may 
(1)  bring  an  action  at  common-law;  (2)  sue  under 
the  Employers'  Liability  Act;  or  (3)  apply  for 
compensation  under  the  Workmen's  Compensation 
Act.  By  taking  the  last  course,  he  avoids  the  dan- 

«<>Dawbarn  (supra),  pp.  174-185. 


46        WORKMEN'S  COMPENSATION  AND  INSURANCE 

ger  of  being  met  by  common-law  defenses;  but  as 
the  Act  limits  the  compensation  according  to  arbi- 
trary schedules,  he  may  recover  less  than  might  be 
awarded  by  a  jury,  which  can  take  personal  suffer- 
ing, medical  expenses,  etc.,  into  consideration.  On 
the  other  hand,  if  the  workman  is  permanently  in- 
capacitated, the  weekly  stipend  he  could  claim  un- 
der the  Act  might  be  more  desirable  than  the  lump 
sum  a  jury  would  award.  There  can  be  no  double 
recovery,  of  both  damages  and  compensation. 

Though  in  the  National  Insurance  Act  of  1911, 
which  contains  provisions  for  Health  Insurance, 
Unemployed  Insurance,  and  general  outdoor  re- 
lief,61 England  has  adopted  some  of  the  features  of 
the  comprehensive  German  scheme,  she  stands  com- 
mitted, so  far,  to  the  more  familiar  form  of  Work- 
men's Compensation  as  the  answer  to  the  problem 
of  industrial  accidents.  This  is  natural  in  a  coun- 
try of  conservative  traditions;  the  abandonment 
of  the  common-law  criteria  of  negligence  was  a 
great  concession,  and  it  was  not  to  be  expected  that 
the  British  mind  would  regard  with  favor  what  has 
frequently  been  characterized  as  a  leap  into  the 
dark.  What  workingmen's  insurance  there  is  in 

«  Boyd,  Workmen's  Compensation,  p.  1172. 


THE  RISE  OF  WORKMEN'S  COMPENSATION  47 

England — and  it  is  by  no  means  inconsiderable — 
is  carried  on  by  private  companies  and  mutual 
"friendly  societies"  which  are  very  jealous  of  gov- 
ernmental interference.62 

As  the  English  and  German  acts  are  typical  of 
the  two  most  prevalent  legislative  methods  of 
coping  with  the  problem  of  injuries  to  workmen, 
and  as  they  are  the  prototypes,  in  whole  or  in  part, 
of  most  of  the  workmen's  compensation  laws  of 
this  country,  we  will  dispose  of  the  systems  of  other 
European  nations  rather  summarily.  In  Austria, 
the  German  plan  of  compulsory  insurance  has  been 
taken  over  almost  bodily.63  In  France,  a  compro- 
mise measure64  was  enacted  in  1898,  which  makes 
the  employer  absolutely  liable,  as  in  England,  but 
provides  for  a  system  of  voluntary  insurance.  Nor- 
way has  a  compulsory  accident  insurance  law  dating 
from  1894  ;65  Sweden  and  Denmark,  workmen's 

«2  Frankel  &  Dawson,  Workingmen's  Insurance  in  Europe,  p.  44; 
also  Willoughby,  Workingmen's  Insurance,  p.  233.  The  first  em- 
ployers' liability  insurance  company  was  founded  in  1881  in  England, 
in  response  to  a  demand  for  protection  against  the  heavy  liabilities 
imposed  by  the  act  of  1880.  Economic  World,  vol.  99,  p.  310  (March 
3,  1917). 

«»  Frankel  &  Dawson  (supra),  p.  115  et  seq.;  Willoughby  (supra),, 
p.  88. 

e*  Frankel  &  Dawson  (supra),  p.  64  et  seq. 

«s  Bulletin  No.  126,  U.  S.  Bureau  of  Labor  Statistics,  pp.  132,  135,. 
163;  Frankel  &  Dawson  (supra),  p.  48. 


48        WORKMEN'S  COMPENSATION  AND  INSURANCE 

compensation  acts  of  the  English  type.66  Belgium 
holds  employers  liable  for  accidental  injuries  to 
employees,  unless  the  former  insure  in  companies 
approved  by  the  state.67  Holland  has  gone  the 
whole  way  in  compelling  employers  to  insure, 
though  not  necessarily  in  the  state  fund  provided.68 
In  Italy,  a  compulsory  insurance  law  was  adopted 
in  1898;  but,  like  the  Dutch  act,  it  allows  employers 
considerable  latitude  with  respect  to  the  sort  of  in- 
surance carried.69  The  compensation  principle  has 
also  been  adopted  in  some  form  in  Finland  (1895), 
Spain  (1900),  Greece  (1901),  Luxembourg 
(1902), Russia  (1903),  Hungary  (1907),  Bulgaria 
(1908),  Liechtenstein  (1910),  Serbia  (1910), 
Montenegro  (1911),  Switzerland  (1912),  Portu- 
gal (1913),  and  some  other  European  states.70 

Outside  of  Europe,  workmen's  compensation  has 
taken  a  decided  hold  on  the  scattered  members  of 
the  British  empire.  In  New  Zealand,  the  Trans- 
vaal, Cape  of  Good  Hope,  at  least  four  of  the  Aus- 

««  Frankel  &  Dawson  (supra),  pp.  51,  54-57;  Bulletin  No.  126 
•(supra),  p.  163. 

•'  Frankel  &  Dawson  (supra),  pp.  61-62. 

«s  Ibid.,  p.  58. 

«» Ibid.,  pp.  81-89. 

TO  Bulletin  No.  90,  U.  S.  Bureau  of  Labor  (September,  1910),  pp. 
723-748;  Prof.  Wambaugh's  article  in  25  Harvard  Law  Review  129 
(December,  1911),  refers  to  the  above,  at  p.  132,  note  3;  see  also 
Frankel  &  Dawson,  Workingmen's  Insurance  in  Europe,  p.  19. 


THE  RISE  OF  WORKMEN'S  COMPENSATION  49 

tralian  provinces,  and  in  Newfoundland,  British 
Columbia,  Manitoba,  Nova  Scotia,  Alberta,  Quebec 
and  Ontario,  acts  chiefly  patterned  on  the  English 
law  are  in  force;  while  Japan,  Peru,  Mexico  and 
Venezuela  have  instituted  the  system.71  Yet  so 
slow  were  the  American  states  in  accepting  the 
theory  that,  after  the  passage  of  the  Quebec  act  of 
1909,  a  Canadian  writer  found  it  necessary  to  go 
back  to  first  principles  in  explaining  it  to  the  read- 
ers of  an  American  law  review.72 

Yet  dissatisfaction  with  the  workings  of  the  com- 
mon-law of  negligence  in  the  United  States  has 
long  been  widespread.  More  than  sixty  years  ago, 
the  Georgia  legislature  passed  an  act  modifying  the 
fellow-servant  rule  in  its  application  to  railways ; 73 
and  similar  statutes,  in  one  case  taking  the  extreme 
form  of  abolition  of  the  rule,74  have  been  adopted  in 
other  states.  The  Federal  government,  which  had 
long  denied  its  injured  employees  any  redress  save 
what  could  be  procured  through  the  uncertain  me- 
dium of  the  Court  of  Claims  and  special  bills,  made 
provision  for  compensation  in  the  case  of  injury  or 

71  Bulletin  No.  126   (supra),  p.  132;  Frankel  &  Dawson  (supra), 
p.  3;  Bulletin  No.  90  (supra) ;  see  also  5  American  Economic  Review 
177. 

72  11  Columbia  Law  Review  36. 

73  Georgia  Acts  of  1855-1856,  p.  155. 

7*  Colorado  Session  Laws  1901,  chapter  67. 


50        WORKMEN'S  COMPENSATION  AND  INSURANCE 

death  of  certain  persons  in  the  Life- Saving  Service 
in  1882;  and  after  1900  various  branches  of  the  mail 
service  and  some  navy  employees  were  included  in 
this  beneficent  scheme.75 

But  even  after  the  opening  of  the  twentieth  cen- 
tury, progress  toward  the  solution  of  the  problem 
of  compensation  for  industrial  accidents  was  slow. 
Every  one  perceived  the  evils  of  the  existing  situa- 
tion and  admitted  that  the  success  of  workmen's 
compensation  in  Europe  warranted  its  adoption 
here;  but  there  was  no  agreement  as  to  which 
European  model  to  follow.76  In  1902  a  very  lim- 
ited provision  was  made  by  a  Maryland  statute  for 
compulsory  cooperative  insurance  in  a  few  employ- 
ments; but  this  was  declared  unconstitutional  be- 
cause of  its  improper  delegation  of  judicial  func- 
tions.77 In  1903-4  a  Massachusetts  committee  on 
relations  between  employer  and  employee  sub- 
mitted to  the  legislature  a  compensation  bill 
adapted  from  the  English  act  of  1897;  but  no  action 
was  taken  in  the  matter.78  Similar  committees  in 
Illinois  and  other  states  in  the  next  two  or  three 

"Journal  of  Political  Economy,  voL  XXIII,  pp.  807-808. 
»•  See  article  by  Willard  C.  Fisher  in  American  Economic  Review, 
vol.  5,  at  p.  993. 

TT  Prof.  Wambaugh's  article  (see  footnote  70),  at  p.  132,  note  4. 
«  Fisher  (see  footnote  76),  p.  293,  note. 


THE  RISE  OF  WORKMEN'S  COMPENSATION  51 

years  studied  the  subject,  reported,  and  vanished 
from  the  pages  of  history  without  having  achieved 
any  substantial  results. 

The  Federal  Employers'  Liability  Act  of  1906 
need  only  be  mentioned  here.  Its  purpose  was  the 
regulation  of  the  redress  of  injuries  to  railroad  em- 
ployees; but  it  was  a  true  employers'  liability  law, 
and  in  no  sense  a  workmen's  compensation  statute. 
It  was  declared  unconstitutional  as  embracing  intra- 
state  matters,  with  which  Congress  had  no  power  to 
deal ; 79  and  a  new  act,  framed  with  a  view  to  avoid- 
ing the  constitutional  defects  of  the  original  statute, 
was  passed  in  1908.  This  latter  law  "establishes 
the  liability  of  interstate  railway  employers  for 
their  negligence  resulting  in  injury  to  their  em- 
ployees, abolishing  the  defense  of  fellow-service, 
and  modifying  the  defenses  of  contributory  negli- 
gence and  assumption  of  risks,  and  stands  as  the 
sum  of  present  achievement  in  its  territory." 
The  act  was  amended  in  1910.  It  is,  as  we  have 
seen,  an  employers'  liability  rather  than  a  work- 

7»  Howard  v.  111.  Cent.  R.  Co.  (First  Employers'  Liability  Cases), 
207  U.  S.  463. 

so  Journal  of  Political  Economy,  vol.  XXIII,  p.  815.  See  article 
on  The  Federal  Employers'  Liability  Act  by  William  W.  Thornton, 
in  Case  and  Comment,  vol.  22,  pp.  323-329,  for  an  excellent  outline 
of  the  Act  by  an  expert.  Mr.  Thornton's  book — Federal  Employers' 
Liability  and  Safety  Appliance  Acts — is  the  standard  work  on  the 
subject. 


62        WORKMEN'S  COMPENSATION  AND  INSURANCE 

men's  compensation  act;  so  we  shall  not  need  to 
scrutinize  it  further. 

In  1908  the  United  States  also  passed  what  has 
been  termed  a  workmen's  compensation  act,81 
though  the  fact  that  it  applied  only  to  employees  of 
the  enacting  power  and  excluded  injuries  due  to  the 
negligence  or  misconduct  of  the  workman  has  been 
said  to  deprive  it  of  that  character.82  The  purpose 
of  the  Act  was  to  afford  protection  to  "government 
employees  engaged  in  hazardous  occupations."  It 
provided  for  the  payment  of  full  wages  during  dis- 
ability, a  feature  which  has  been  criticized  as  tend- 
ing to  encourage  malingering; 83  and  had  other  seri- 
ous defects.  Nevertheless,  it  marked  a  distinct  ad- 
vance, from  the  point  of  view  of  economic  theory, 
over  any  previous  American  statute.  It  has  now 
been  superseded  by  the  new  Federal  Workmen's 
Compensation  Act  of  September,  1916,  wherein  the 
amount  of  compensation  payable  during  disability 
is  reduced  to  two-thirds  of  monthly  pay,  and  there  is 
added  the  salutary  provision  that  a  partially  dis- 
abled employee  must  accept  suitable  employment  or 
forfeit  his  claims  under  the  Act.84 

«»  35  U.  S.  Stat.  at  Large,  556. 
szWambaugh  (see  footnote  70),  p.  132,  note  4. 
«3  Journal  of  Political  Economy,  vol.  XXIII,  p.  811. 
«*  Public,  No.  267,  64th  Cong.  (H.  R.  15316).    Approved  Septem- 
ber 7,  1916. 


THE  RISE  OF  WORKMEN'S  COMPENSATION  5? 

In  1909,  the  agitation  in  the  states  first  took  effec- 
tive shape.  That  year  saw  the  first  special  state 
commissions  of  inquiry,  in  Minnesota,  Wisconsin 
and  New  York ;  and  also  the  impressive  Workmen's 
Compensation  conference  in  Atlantic  City,  from 
the  twenty-ninth  to  the  thirty-first  of  July.85 
In  1909,  too,  Montana  passed  a  compensation 
law  applying  to  miners  only,86  which  was  after- 
wards declared  unconstitutional  on  rather  narrow 
grounds.87  Another  statute  adopted  in  this  year 
was  that  entitled  Chapter  31  of  the  Consolidated 
Laws  of  New  York,  under  the  head  of  "Labor  Law 
— Employers'  Liability,"  which,  as  amended  in  1910 
and  1915,  constitutes  an  elective  compensation  law 
which  has  proved  almost  a  dead  letter.88 

In  1910  New  York  passed  a  compulsory  com- 
pensation law  applying  to  certain  hazardous  occu- 
pations. Its  fate — it  was  declared  unconstitutional 
by  the  Court  of  Appeals — has  been  discussed  at 
length  elsewhere. 

It  was  in  1911  that  the  avalanche  of  workmen's 
compensation  laws  began.  That  year  is  memor- 

86  Fisher  (see  footnote  76),  p.  223,  note. 

s«  Bradbury,  Workmen's  Compensation  and  State  Insurance  Law 
(2d  Ed.),  p.  9. 

87  Cunningham  v.   Northwestern   Improvement  Co.,  44  Mont.   108, 
119  Pac.  554. 

ss  Bradbury  (supra),  p.  10. 


54        WORKMEN'S  COMPENSATION  AND  INSURANCE 

able  for  two  decisions  against  the  constitutionality 
of  such  acts — those  of  Montana  and  New  York 
— but  it  is  even  more  remarkable  for  the  adoption  of 
the  compensation  principle  by  California,  Illinois, 
Kansas,  Massachusetts,  Nevada,  New  Hampshire, 
New  Jersey,  Ohio,  Washington  and  Wisconsin. 
During  the  following  year  Arizona,  Maryland, 
Michigan  and  Rhode  Island  saw  the  light;  and  in 

1913  New  York  passed  a  valid  compensation  act, 
together  with  Connecticut,  Iowa,  Minnesota,  Ne- 
braska, Oregon,  Texas  and  West  Virginia.     In 

1914  Kentucky  and  Louisiana  joined  the  ranks; 
the  Kentucky  act,  however,  being  later  declared 
unconstitutional  and  superseded  by  a  new  one. 
During  the  year  1915,  compensation  laws  were 
adopted  for  the  first  time  in  Alaska,   Colorado, 
Hawaii,    Indiana,    Maine,    Montana,    Oklahoma, 
Pennsylvania,  Porto  Rico,  Vermont  and  Wyoming. 
Kentucky  finally  passed  a  valid  statute  in  1916; 
and  during  the  legislative  sessions  of  1917  Dela- 
ware, Idaho,  New  Mexico,  South  Dakota  and  Utah 
were  added  to  the  list  of  compensation  states.     As 
these  pages  go  to  press,  word  comes  that  the  Vir- 
ginia legislature  of  1918  has  seen  the  light,  and 
passed  a  compensation  act  over  the  governor's  veto. 
These  statistics  represent  merely  the  initial  passage 


THE  RISE  OF  WORKMEN'S  COMPENSATION  55 

of  such  laws  in  the  thirty-eight  states  and  three  ter- 
ritories in  which  they  are  now  in  force;  in  addition, 
there  have  been  countless  amending  acts  and  sup- 
plementary measures.89 

In  closing  this  long  historical  chapter,  the  writer 
wishes  to  emphasize  that  workmen's  compensation 
has  come  to  stay.  In  no  jurisdiction  where  it  has 
been  adopted  has  it  been  abandoned ; 90  and  if  this 
record  is  maintained,  we  shall  have  good  reason  to 
hope  that  the  goal  of  industrial  peace  will  even- 
tually cease  to  be  a  mere  glittering  abstraction,  and 
become  a  tangible  reality. 

s»See  the  Digests  of  Workmen's  Compensation  laws  published  by 
the  Workmen's  Compensation  Publicity  Bureau;  also  Bulletins  No. 
126  and  185  of  the  U.  S-.  Bureau  of  Labor  Statistics.  For  an  account 
of  the  Virginia  act  of  1918,  see  The  Weekly  Underwriter,  vol. 
XCVIII,  p.  392  (March  23,  1918). 

»o  American  Economic  Review,  vol.  5,  pp.  222-223;  Bulletin  No. 
126,  U.  S.  Bureau  of  Labor  Statistics,  p.  29. 


CHAPTER  III 

QUESTIONS  OF  CONSTITUTIONALITY 

PERHAPS  the  most  original  contribution  of  the 
United  States  to  the  science  of  government  is  the 
conception  of  our  written  Constitution  as  the  su- 
preme law  of  the  land,  to  which  even  the  national 
legislature,  chosen  by  the  free  suffrage  of  the  peo- 
ple, must  bow.  As  a  natural  result  of  this  broad 
proposition,  the  courts  have  assumed  the  power, 
which  they  have  exercised  without  serious  challenge 
for  over  a  century,  of  declaring  void  legislative 
measures  in  conflict  with  the  Constitution.1  And 
this  power  has  been  exercised,  not  only  by  the  Fed- 
eral courts,  but  also  by  the  courts  of  the  States  with 
reference  to  statutory  enactments  of  their  own  leg- 
islatures, the  validity  of  which  they  have  ventured 
to  test  by  both  State  and  Federal  Constitutions.2 

iMarbury  v.  Madison,  1  Cranch  137,  1  Curtis  368  (1803). 

2  Ives  v.  South  Buffalo  Ry.  Co.,  201  N.  Y.  271,  94  N.  E.  431  (1911). 
That  it  is  not  altogether  clear  whether  the  court  in  the  Ives  case 
actually  passed  upon  the  Federal  question,  though  it  assumed  to  test 
the  New  York  statute  by  both  Federal  and  State  constitutions,  see 
Political  Science  Quarterly,  vol.  XXXII,  pp.  546-547  (December, 
1917). 

56 


QUESTIONS  OF  CONSTITUTIONALITY  57 

Because  of  this  peculiarity  of  the  American  sys- 
tem of  government,  the  advocates  of  workmen's 
compensation  in  the  United  States  have  been  con- 
fronted with  a  special  difficulty  wholly  unlike  any 
with  which  Europeans  have  had  to  cope.  They 
have  had  not  only  to  construct  legislation  which  the 
Solons  at  the  capital  would  consent  to  pass,  but  they 
have  found  that  they  must  also  convince  the  courts 
that  it  does  not  infringe  any  of  the  sacred  Consti- 
tutional guarantees. 

This  enforced  testing  of  labor  legislation  by  the 
principles  of  the  fundamental  law  has  not  been  alto- 
gether a  bad  thing.  In  the  heat  of  party  warfare, 
under  the  spell  of  ill-considered  enthusiasms,  the 
glittering  desirability  of  the  end  to  be  attained  by 
proposed  legislation  often  blinds  the  majority  to  the 
incidental  invasions  of  minority  rights  which  the 
method  employed  entails.  It  is  the  part  of  pru- 
dence, perhaps,  to  leave  to  the  sober  afterthought 
of  the  courts  the  ultimate  solution  of  the  problem 
of  constitutionality  to  which  legislators  have  so 
often  applied  themselves  after  such  imperfect  delib- 
eration. 

But  the  complaint  has  been  made,  and  with  much 
reason,  that  the  attitude  of  the  courts  with  regard 
to  constitutional  questions  arising  out  of  workmen's 


58        WORKMEN'S  COMPENSATION  AND  INSURANCE 

compensation  has  been  obstructive  and  reactionary. 
One  of  the  chief  objections  of  the  courts  to  the 
workmen's  compensation  principle  has  been  that  it 
makes  the  employer  liable  without  proof  of  fault  on 
his  part.  But  liability  without  fault  is  not  a  new 
thing  in  our  law.  As  has  been  pointed  out  by  an 
eminent  legal  authority,  trover,  trespass,  slander 
and  libel,  all  ancient  parts  of  our  legal  system,  re- 
quire no  moral  obliquity;  and  there  are  examples 
of  civil  disabilities  placed  on  men  who  are  wholly 
blameless.3  The  very  law  of  master  and  servant 
itself  furnishes  an  illustration  in  the  shape  of  the 
general  liability  of  the  master  for  the  torts  of  the 
servant,  whether  authorized  or  ratified  by  him  or 
not,  which  are  done  in  the  course  of  the  servant's 
employment  and  the  master's  business.4  The  lia- 
bility in  the  latter  case  is  to  a  third  party,  and  the 
responsibility  is  said  to  arise  out  of  the  peculiar  rela- 
tion created  by  the  contract  of  employment;  but  it 
seems  no  more  a  violation  of  principle  to  hold  the 
employer  a  warrantor  of  the  safety  of  the  employ- 
ment to  the  servant,  than  to  make  him  generally 
responsible  to  all  third  parties  for  that  servant's 
unauthorized  wrongful  acts. 

«25  Harvard  Law  Rev.  134  (Dec.  1911). 
'Burdick,  Law  of  Torts  (3d  Ed.),  p.  155. 


QUESTIONS  OF  CONSTITUTIONALITY  59 

Some  of  our  courts,  however,  have  taken  a  dif- 
ferent view.  The  first  judicial  pronouncement 
against  the  constitutionality  of  a  state  workmen's 
compensation  act  (if  we  except  the  unreported  de- 
cision of  a  lower  court  of  Maryland  in  1902,  from 
which  no  appeal  was  taken)  5  was  that  of  the  New 
York  Court  of  Appeals  in  Ives  v.  South  Buffalo 
Ry.  Co.6  The  Ives  case  has  had  a  profound  effect 
on  all  subsequent  legislation  in  the  United  States, 
and  has  caused  the  advocates  of  workmen's  com- 
pensation in  many  jurisdictions  to  frame  their  acts 
on  a  very  different  plan.7 

The  act  which  was  overthrown  by  the  Ives  case 
was  chapter  674  of  New  York  laws  of  1910, 
which  went  into  effect  on  June  25  of  that  year.  It 
provided  that  employers,  in  certain  occupations 
which  were  designated  as  especially  hazardous, 
should  be  liable  to  pay  compensation  based  upon 
wages  in  case  persons  in  their  service  engaged  in 
manual  or  mechanical  labor  should  suffer  in  the 
course  of  the  employment  a  bodily  injury  by  an  ac- 
cident arising  out  of  the  employment  and  in  whole 
or  in  part  caused  by  a  necessary  risk  of  the  occupa- 

e  Bradbury,  Workmen's   Compensation  and  State   Insurance  Law 
(2d  Ed.),  p.  9. 

«201  N.  Y.  271,  94  N.  E.  431  (1911). 
v  Bradbury  (supra),  p.  10. 


60        WORKMEN'S  COMPENSATION  AND  INSURANCE 

tion  or  by  negligence  of  the  employer  or  of  any  of 
his  employees ;  an  exception  being  made  in  cases  of 
injuries  caused  in  whole  or  in  part  by  the  serious  or 
willful  misconduct  of  the  injured  workman.8  A 
provision  of  the  Act  which  can  hardly  be  com- 
mended, in  view  of  the  radical  change  about  to  be 
effected  in  the  preexisting  law,  was  that  it  should 
take  effect  in  less  than  ten  weeks ;  this  is  in  strong 
contrast  to  the  policy  of  foreign  workmen's  com- 
pensation laws,  many  of  which  allowed  a  year  or 
more  for  the  necessary  re-adjustment  of  men's 
ideas.9 

The  New  York  statute  was  declared  by  the  court 
in  the  Ives  case  to  be  in  conflict  with  both  the  Fed- 
eral and  state  constitutions.  The  Fourteenth 
Amendment  of  the  former,  and  Article  I,  section 
6  of  the  latter,  forbidding  the  taking  of  private 
property  without  due  process  of  law,  were  vio- 
lated, the  judges  said,  by  an  act  imposing  upon  an 
employer  who  had  not  been  guilty  of  any  fault, 
the  obligation  to  pay  compensation  for  injuries 

825  Harvard  Law  Rev.  135 — here  there  is  an  excellent  summary 
of  the  Act.  See  also  article  on  The  Constitutionality  of  Workmen's 
Compensation  and  Compulsory  Insurance  Laws,  in  Case  and  Com- 
ment (Sept.  1915),  pp.  275-260;  and  a  discussion  of  The  Workmen's 
Compensation  Cases  in  Political  Science  Quarterly,  vol.  XXXII,  pp. 
542-569  (December,  1917). 

»25  Harvard  Law  Review  136. 


QUESTIONS  OF  CONSTITUTIONALITY  61 

occurring  by  reason  of  a  danger  which  was  in- 
herent in  and  inseparable  from  a  particular  em- 
ployment.911 

It  would  be  difficult  to  exaggerate  the  sensa- 
tion caused  by  this  decision.  Labor  rose  as  a  body 
in  protest,  and  sober  citizens  who  had  been  re- 
garded as  pillars  of  the  existing  order  railed 
against  our  "reactionary"  courts.  Recall  of  judi- 
cial decisions,  till  then  a  distrusted  political 
nostrum,  became  a  party  issue.  Socialists  and 
financiers,  laymen  and  sober  legal  reasoners,10 
joined  in  denunciation  of  the  New  York  Court  of 
Appeals. 

One  of  the  worst  features  of  the  situation,  from 
the  point  of  view  of  the  courts'  defenders,  was  the 
radical  divergence  of  views  which  soon  appeared 
among  the  different  state  tribunals.  Only  a  few 
months  after  the  decision  in  the  Ives  case,  the  Su- 
preme Court  of  the  state  of  Washington  upheld  a 
workmen's  compensation  act  essentially  similar  to 
the  discarded  New  York  statute,  in  the  oft-quoted 
case  of  State  ex  rel.  Davis-Smith  Co.  v.  Clausen.11 

9a  But  see  footnote  2. 

10  Such  as  Prof.  Wambaugh.  See  his  article  in  25  Harvard  Law 
Rev.  129-139,  to  which  reference  has  already  been  made.  See  also 
note  on  Ives  case  in  11  Columbia  Law  Rev.  475-476. 

1U17  Pac.  1101  (Sept.  1911). 


62        WORKMEN'S  COMPENSATION  AND  INSURANCE 

In  the  opinion,  much  stress  was  laid  on  the  police 
power,  which  was  held  to  justify  such  legislation, 
the  court  quoting 12  from  Noble  State  Bank  v.  Has- 
kell 13  as  follows :  "It  may  be  said  in  a  general  way 
that  the  police  power  extends  to  all  the  great  public 
needs.  It  may  be  put  forth  in  aid  of  what  is  sanc- 
tioned by  usage,  or  held  by  the  prevailing  morality 
or  strong  and  preponderant  opinion  to  be  greatly 
and  immediately  necessary  to  the  public  welfare." 
In  referring  to  the  Ives  case,  the  Washington  court 
said: 14  "The  principle  embodied  in  the  statutes  is, 
however,  the  same,  and  it  must  be  conceded  that 
the  case  is  direct  authority  against  the  position  we 
have  here  taken.  We  shall  offer  no  criticism  of  the 
opinion.  We  will  only  say  that  notwithstanding 
the  decision  comes  from  the  highest  court  of  the  first 
state  of  the  Union,  and  is  supported  by  a  most  per- 
suasive argument,  we  have  not  been  able  to  yield 
our  consent  to  the  view  there  taken." 

The  New  York  act  had  been  compulsory,  while 
the  Massachusetts  compensation  law  of  1911  was 
not;  so  the  decision  of  the  Supreme  Judicial  Court 
of  the  latter  state  in  The  Opinion  of  the  Justices, 
209  Mass.  607,  cannot  be  deemed  a  disaffirmance  of 

12  At  page  1110. 

"219  U.  S.  104  (1910). 

"At  page  1120  of  Clausen  case. 


63 

the  doctrine  of  the  Ives  case.  In  fact,  the  court 
expressly  distinguished  that  case,15  and  rested  its 
decision  on  the  ground  that,  in  view  of  the  non- 
compulsory  nature  of  the  statute  under  considera- 
tion, there  was  nothing  that  could  be  construed  as 
violating  the  constitutional  prohibition  against  the 
taking  of  private  property  without  due  process  of 
law.16  Nevertheless,  there  was  a  not  unnatural 
popular  notion  that  the  court  was  hedging  as  a 
result  of  the  clamor  caused  by  the  Ives  case;  and 
this  impression  was  strengthened  by  the  fact  that 
the  Act  upheld,  though  not  nominally  compulsory, 
was  so  severe  on  the  employer  in  taking  away  his 
common-law  defenses  as  to  be  practically  so.17 

The  case  of  Cunningham  v.  Northwestern  Im- 
provement Co.,18  in  which  the  Montana  Miners' 
Compensation  Law  was  held  invalid,  has  been  ad- 
verted to  in  a  previous  chapter.  The  difficulty 
which  the  Montana  court  had  with  the  statute  was 
that  it  submitted  the  employer  to  a  double  liability, 
as  it  failed  to  protect  him  after  payment  of  compen- 
sation under  the  Act  from  an  action  at  law  for  the 

IB  At  page  610  of  the  opinion. 

I6  At  page  612  of  the  opinion. 

«  See  article  by  James  A.  Lowell  on  "Assumption  of  Risk  and  the 
Workmen's  Compensation  Act"  in  Massachusetts  Law  Quarterly,  voL 
1,  no.  2  (February,  1916),  at  p.  49. 

18119  Pac.  554  (1911),  especially  pp.  565-566. 


^4        WORKMEN'S  COMPENSATION  AND  INSURANCE 

same  injury.  This  was  felt  to  be  a  denial  of  equal 
protection  of  the  laws.  It  will  be  seen  that  this  de- 
cision did  not  squarely  condemn  the  principle  of 
workmen's  compensation,  but  merely  one  of  the 
details  of  administration;  in  fact,  the  court  ex- 
pressly stated  that  the  passage  of  such  an  act  was 
a  proper  exercise  of  the  police  power,  was  not  in- 
valid as  class  legislation,  and  did  not  deprive  the 
employer  of  "due  process  of  law"  in  spite  of  the 
fact  that  it  substituted  a  special  proceeding  to  ascer- 
tain the  amount  of  compensation  for  a  trial  by  jury. 
The  decision  was  of  the  helpful,  constructive  sort, 
and  a  credit  to  the  tribunal  which  rendered  it. 
Though  the  case  destroyed  the  specific  act,  the  un- 
prejudiced student  must  admit  that  the  reasons  for 
such  action  were  especially  strong;  and  the  pro- 
gressive views  which  Mr.  Justice  Smith  advanced  in 
his  able  opinion  showed  the  legislature  the  way  to 
the  excellent  statute  which  Montana  now  possesses. 
Out  of  this  mass  of  conflicting  decisions  one  prop- 
osition came  to  be  clearly  derivable:  a  workmen's 
compensation  law,  if  compulsory,  is  in  danger  of 
being  declared  unconstitutional  by  the  courts;  but 
an  act  which  is  elective  in  nature  is  not  open  to  any 
of  the  constitutional  objections  yet  advanced. 
Legislatures  burning  with  enthusiasm  for  the  prin- 


QUESTIONS  OF  CONSTITUTIONALITY  65 

ciple,  but  prudently  desirous  of  avoiding  any  clash 
with  the  judiciary,  began  casting  about  for  some 
method  of  dodging  the  issue  of  compulsion  while 
yet  creating  a  compensation  system  practically 
binding  on  all  parties  to  contracts  of  employment. 
The  ingenious  scheme  adopted  in  New  Jersey  is 
the  first  to  merit  attention.  By  Section  II  of  an 
act  passed  in  191 1,19  a  system  of  workmen's  com- 
pensation patterned  on  the  English  statute  was  in- 
troduced; but  Section  I  contains  an  alternative 
modification  of  the  common-law,  abolishing  the 
fellow-servant  rule,  assumption  of  risks,  etc.,  but 
retaining  the  privilege  of  suit  for  injuries.  The 
"alternative,"  however,  is  scarcely  more  than  a 
nominal  one;  for  every  contract  of  hiring  is  pre- 
sumed to  be  made  with  reference  to  the  provisions 
of  Section  II  "unless  there  be  as  part  of  such  con- 
tract an  express  statement  in  writing,  prior  to  any 
accident,  either  in  the  contract  itself  or  by  written 
notice  from  either  party  to  the  other,  that  the  pro- 
visions of  Section  II  of  this  act  are  not  intended  to 
apply." 

It  will  be  seen  that,  owing  to  this  tricky  presump- 
tion, the  elective  feature  of  the  Act  is  greatly  weak- 
ened.   For  not  only  are  many  employments  en- 
is  N.  J.  Laws  1911,  c.  95. 


66        WORKMEN'S  COMPENSATION  AND  INSURANCE 

tered  into  so  informally  that  the  "express  statement 
in  writing"  would  never  be  thought  of,  but  it  is 
safe  to  say  that  any  employer  who  requested  pro- 
spective employees  to  sign  such  a  statement  would 
arouse  so  much  hostility  and  suspicion  that  he  would 
soon  be  glad  enough  to  abandon  the  practice. 

Yet  the  New  Jersey  statute  was  held,  and  I 
think  rightly,  to  be  constitutional.20  There  was  "no 
coercion,"  said  the  court ;  and,  short  of  coercion,  no 
form  of  inducement  to  parties  to  accept  a  compen- 
sation act  seems  to  be  invalid.  In  over  twenty 
states,  varieties  of  "elective  compensation,"  follow- 
ing more  or  less  closely  the  New  Jersey  plan  of 
"presumptive  acceptance,"  have  been  adopted.21 

Whether  attributable  to  the  caution  with  which 
the  state  legislatures  proceeded,  or  to  a  change  of 
heart  on  the  part  of  the  courts,  the  fact  remains 
that  for  three  years  after  the  Ives  and  Cunning- 
ham cases  no  judicial  decrees  of  invalidity  were  pro- 
nounced against  workmen's  compensation  acts. 

20  Sexton  v.  Newark  District  Telegraph  Co.,  86  AtL  (N.  J.)  451, 
especially  page  455,  where  it  is  said:  "No  coercion  was  exercised  by 
the  legislature  upon  either  party  to  the  contract  of  hiring.  It  is 
left  entirely  optional  with  them  whether  they  will  stand  upon  the 
1st  or  ?d  sections  of  the  act." 

2»  See  Digests  published  by  the  Workmen's  Compensation  Publicity 
Bureau ;  also  texts  of  the  acts. 


QUESTIONS  OF  CONSTITUTIONALITY  67 

The  Illinois  Supreme  Court  broke  this  record  in 
Courter  v.  Simpson  Construction  Co.,22  decided  in 
October,  1914.  In  that  case,  however,  the  consti- 
tutionality of  the  whole  act  was  not  attacked,  but 
merely  that  of  paragraph  (f)  of  section  19,  which 
provided  for  a  review  of  the  decisions  of  the  indus- 
trial board  by  the  Supreme  Court  of  the  state.  The 
justices  found  that  this  was  in  conflict  with  section 
2  of  Article  6  of  the  state  Constitution,  which  gives 
the  Supreme  Court  original  jurisdiction  only  "in 
cases  relating  to  the  revenue,  in  mandamus,  and 
habeas  corpus";  and  as  the  effect  of  the  objection- 
able provision  in  the  statute  was  to  give  the  court 
original  jurisdiction  on  certiorari,  that  portion  was 
declared  unconstitutional  without  affecting  any  of 
the  other  sections.  The  decision  will  therefore  be 
seen  to  be  on  a  very  narrow  ground ;  and  as  it  did  not 
seriously  affect  the  workings  of  the  Act,  but  merely 
threw  upon  the  Circuit  Courts  the  duty  of  review- 
ing the  findings  of  the  industrial  board  which  the 
legislature  had  sought  to  thrust  on  the  higher  tri- 
bunal, the  result  reached  by  the  Illinois  judges  is 
not  likely  to  arouse  severe  criticism. 

Kentucky  has  now  a  valid  compensation  law  in 

32  264  III.  488,  especially  pp.  493-494. 


68       WORKMEN'S  COMPENSATION  AND  INSURANCE 

Laws  1916,  c.  33,  whose  constitutionality  was  up- 
held in  Greene  v.  Caldwell; 23  but  thorny  roads  had 
to  be  traversed  before  this  desirable  goal  was  at- 
tained. In  Kentucky  State  Journal  Co.  v.  Work- 
men's Compensation  Board,24  decided  late  in  1914, 
the  Court  of  Appeals  of  the  Blue  Grass  State  had 
found  Laws  1914,  c.  73,  in  conflict  with  section  54 
of  the  state  constitution,  prohibiting  the  legislature 
from  limiting  the  amount  to  be  recovered  for  in- 
juries resulting  in  death,  or  for  injuries  to  persons. 
A  petition  for  re-hearing  was  denied.25  Subse- 
quent to  this  Kentucky  decision,  the  courts  of  that 
state  were  at  pains  to  re-affirm  all  the  old  common- 
law  doctrines  applicable  to  industrial  accidents.26 
In  justice  to  the  court,  however,  it  must  be  ad- 
mitted that  the  arbitrary  nature  of  the  fundamental 
law  of  Kentucky  left  a  conscientious  tribunal  prac- 
tically no  option.  As  Judge  Dorsey  said : 27 
"Whether  the  constitutional  restrictions  herein 
above  discussed  are  wise  or  unwise,  this  court  is 
bound  to  obey  them."  The  real  fault  was  in  the 

28186  S.  W.  (Ky.)  648  (1916). 

24170  S.  W.  (Ky.)  1166. 

25  172  S.  W.  (Ky.)  674. 

2«180  S.  W.  (Ky.)  79  ( fellow-servant ) ;  180  S.  W.  (Ky.)  86  (as- 
sumption of  risks);  180  S.  W.  (Ky.)  55  (duty  of  master  to  furnish 
safe  appliances). 

27  At  page  1171  of  the  case  (170  S.  W.  1166). 


QUESTIONS  OF  CONSTITUTIONALITY  69- 

legislature,  which  should  have  made  the  Act  op- 
tional, thus  avoiding  constitutional  objections,  as 
was  finally  done  in  the  statute  of  1916;  or,  if  it  were 
insistent  on  the  more  radical  measure,  should  have 
delayed  its  passage  until  an  amendment  to  permit 
of  compulsory  workmen's  compensation  laws  could 
have  been  adopted  by  the  people;  a  course  which 
has  been  successfully  pursued  in  California  (1911) , 
Ohio  (1912),  New  York  (1913),  and  Pennsylvania 
(1915). 28 

The  Texas  Workmen's  Compensation  Law  was 
for  some  time  in  a  state  of  suspended  animation,  two 
intermediate  appellate  tribunals  having  given  con- 
flicting decisions  on  the  question  of  its  validity.  In 
the  first  of  these  cases,  Memphis  Cotton  Oil  Co.  v. 
Tolbert,29  the  Court  of  Civil  Appeals  of  Amarillo 
County  held  the  act  not  violative  of  equal  protection 
of  the  laws  or  due  process  under  the  Fourteenth 
Amendment  of  the  Federal  Constitution,  and  also 
expressly  declared  the  statute  to  be  within  the  police 
power  and  not  contrary  to  public  policy.  It  was 
suggested,  but  not  decided,  that  the  sections  author- 
izing the  creation  and  regulation  of  the  Texas  Em- 
ployers' Liability  Association  might  violate  the  pro- 

28  See  Digests  of  Workmen's  Compensation  Aid  Bureau. 
2»171  S.  W.  (Tex.)  309  (December,  1914). 


70        WORKMEN'S  COMPENSATION  AND  INSURANCE 

vision  of  the  State  Constitution  relating  to  private 
corporations;  but  the  court  intimated  that  in  such 
a  case  the  objectionable  sections  might  be  elim- 
inated without  affecting  the  rest  of  the  Act. 

In  absolute  contradiction  to  the  Tolbert  case  was 
Middleton  v.  Texas  Power  and  Light  Co.,30  decided 
about  a  month  later  by  the  Austin  County  Court  of 
Civil  Appeals.  The  court  said:31  "We  have 
reached  the  conclusion  that  so  much  of  the  statute 
here  involved  as  undertakes  to  deprive  an  employee 
of  what  otherwise  would  be  his  cause  of  action 
against  his  employer  is  unconstitutional  and  void. 
.  .  .  Our  reason  for  holding  that  the  provision  of 
the  statute  referred  to  is  unconstitutional  is  based 
upon  the  fact  that  it  leaves  it  optional  as  to  the  em- 
ployer, and  makes  it  compulsory  as  to  the  employee, 
when  the  employer  has  elected  to  avail  himself  of 
the  benefits  of  the  statute."  Due  process  of  law 
and  equal  protection  of  the  laws  were  both  denied, 
the  court  found;  and  it  pointed  out  that  "it  is  be- 
yond the  domain  of  legislative  power  to  confer  upon 
any  person  authority  to  say  what  particular  law,  or 
which  of  two  particular  laws,  shall  govern  his  rights 
.and  the  rights  of  his  employee  as  between  them."  " 

»oi78  S.  W.  (Tex.)  956  (January,  1915). 
«  At  page  957  of  the  opinion. 
«  At  page  959  of  the  case. 


QUESTIONS  OF  CONSTITUTIONALITY  71 

This  decision  presented  a  new  and  interesting 
phase  of  the  constitutional  question.  The  court  did 
not  object  to  the  statute  because  it  was  compulsory 
— in  fact,  the  decision  in  State  ex  rel.  Davis-Smith 
Co.  v.  Clausen 33  was  expressly  distinguished  on 
the  ground  that  the  act  upheld  in  that  case  was  com- 
pulsory as  to  both  employers  and  employees.34  It 
was  because  the  law  was  binding  on  one  class — the 
employees — and  voluntary  as  to  the  other — the  em- 
ployers— that  it  was  overthrown.  By  one  section, 
certain  common-law  defenses  of  the  employer  are 
abolished  in  personal  injury  suits;  by  another,  em- 
ployees of  those  employers  who  subscribe  to  the  Act 
lose  any  right  of  action  arising  out  of  injury  re- 
ceived in'  the  course  of  the  employment,  and  they 
are  forced  to  look  solely  to  specified  insurance  asso- 
ciations or  companies  for  compensation.  In  other 
words,  the  employer  can  elect  whether  he  shall  come 
under  the  Act  and  pay  premiums  to  the  Insurance 
fund,  or  stay  outside  and  be  deprived  of  certain 
common-law  defenses ;  but  the  employee  has  no  elec- 
tion and  is  bound  by  the  decision  of  his  master  in 
the  matter. 

Whether  the  distinction  really  constitutes  a  seri- 
ous defect  may  well  be  doubted.  The  employee  in 

as  117  Pac.  (Wash.)  1101.  «*  At  page  960  of  the  case. 


72        WORKMEN'S  COMPENSATION  AND  INSURANCE 

either  case  is  given  a  claim  to  compensation  consid- 
erably more  substantial  than  that  which  he  pos- 
sessed at  common-law.  The  mere  fact  that  the  em- 
ployer is  left  to  decide  whether  he  shall  submit  to 
being  sued  for  injuries  to  his  workmen  without  set- 
ting up  his  special  defenses,  or  agree  to  insure  in 
accordance  with  the  provisions  of  the  Act,  does  not 
impress  any  great  hardship  on  the  employee.  The 
latter  is  not  deprived  of  his  remedy,  though  the  na- 
ture of  it  is  altered.  The  one-sidedness  of  the 
arrangement  is  more  apparent  than  real.  It  is  a 
mere  technical  defect,  which  the  court,  in  the  light 
of  the  powerful  presumption  in  favor  of  the  valid- 
ity of  acts  of  the  legislature,  might  well  have  over- 
looked. To  this  view  the  highest  court  of  Texas 
finally  came  in  reversing  the  Middleton  case  on 
appeal;35  though  the  particular  line  of  argument 
adopted,  with  its  resort  to  the  fiction  of  an  implied 
waiver,  may  be  open  to  criticism.  The  court  said: 
"The  effect  of  the  Act  upon  the  rights  of  em- 
ployees cannot  be  properly  weighed  or  determined 
without  a  due  consideration  of  its  aim  and  policy  in 
their  interest.  Its  theory,  as  it  concerns  them,  is 
that  the  plan  of  compensation  it  provides  for  their 
injuries  suffered  in  the  course  of  their  employment 

so  185  S.  W.  (Tex.)  556. 


QUESTIONS  OF  CONSTITUTIONALITY  73 

is  more  advantageous  than  a  suit  for  damages.  In 
the  latter,  the  employee  is  compelled  to  assume  the 
burden  of  establishing  that  his  injury  was  caused  by 
the  employer's  negligence  or  the  negligence  of  a 
servant  for  which  the  employer  is  responsible.  His 
suit  fails  if  it  is  subject  to  any  of  the  common  law 
defenses,  that  is,  if  his  own  negligence  was  the 
proximate  cause  of  the  injury,  or  if  the  injury  was 
due  to  a  risk  he  assumed,  or  the  negligence  of  a  fel- 
low-servant. By  the  Act  a  fixed  compensation  is 
payable  to  him  upon  the  mere  happening  of  any 
injury  in  the  course  of  the  employment,  or  to  his 
beneficiaries  in  the  event  of  his  death  from  the  in- 
jury, without  reference  to  any  negligence  on  the 
part  of  the  employer  or  his  servants,  and  without 
regard  to  defenses  available  to  the  employer  at 
common  law. 

"With  this  as  the  evident  spirit  and  design  of  the 
Act  in  the  employee's  interest,  his  entering  the  serv- 
ice of  an  employer  who  in  his  business  pursuit  is 
governed  by  the  Act,  or  his  remaining,  after  notice 
duly  given,  in  the  service  of  an  employer  who  has 
adopted  its  plan  of  compensation  and  become  sub- 
ject to  it,  is  made  to  operate  as  a  waiver  of  any  cause 
of  action  against  the  employer  on  account  of  any 
injury  suffered  in  the  course  of  the  employment,  ex- 


74        WORKMEN'S  COMPENSATION  AND  INSURANCE 

cept  for  exemplary  damages  in  behalf  of  a  surviving 
husband,  wife,  or  heirs,  as  already  noted. 

"Does  this  deprive  the  employee  of  any  vested 
right  or  property  right?  It  is  clear  that  it  takes 
from  him  no  property  right.  .  .  .  That  which  is 
withdrawn  from  the  employee  is  merely  his  right 
of  action  against  the  employer,  as  determined  by  the 
rules  of  the  common  law,  in  the  event  of  his  future 
injury.  .  .  .  There  cannot  be  a  vested  right,  or  a 
property  right,  in  a  mere  rule  of  law." 

Though  often  discussed,  the  right  of  the  legisla- 
ture to  abridge  or  abolish  the  master's  special  de- 
fenses to  an  action  by  the  servant  for  injuries  re- 
ceived in  the  course  of  his  employment,  has  been 
denied  in  none  of  the  cases  involving  the  constitu- 
tionality of  workmen's  compensation  acts.  Prob- 
ably this  is  because  the  United  States  Supreme 
Court  expressly  sanctioned  such  an  alteration  of  the 
common  law  in  the  Second  Employers'  Liability 
Cases,30  in  which  the  constitutionality  of  the  Fed- 
eral Employers'  Liability  Act  of  1908  was  upheld. 
In  the  course  of  the  opinion,  Mr.  Justice  Van 
Devanter  refuted  the  opponents  of  the  Act  in  these 
memorable  words: 

"Of  the  objection  to  these  changes,  it  is  enough 

38  223  U.  S.  1,  50. 


QUESTIONS  OF  CONSTITUTIONALITY  75 

to  observe :  First.  'A  person  has  no  property,  no 
vested  interest,  in  any  rule  of  the  common  law. 
That  is  only  one  of  the  forms  of  municipal  law,  and 
is  no  more  sacred  than  any  other.  Rights  of  prop- 
erty which  have  been  created  by  the  common  law 
cannot  be  taken  away  without  due  process ;  but  the 
law  itself,  as  a  rule  of  conduct,  may  be  changed  at 
the  will  ...  of  the  Legislature,  unless  prevented 
by  constitutional  limitations.  Indeed,  the  great 
office  of  statutes  is  to  remedy  defects  in  the  com- 
mon law  as  they  are  developed,  and  to  adapt  it  to 
the  changes  of  time  and  circumstances.'  Munn  v. 
Illinois,  94  U.  S.  113, 134;  (citing  also  other  cases). 
Second.  The  natural  tendency  of  the  changes  de- 
scribed is  to  impel  the  carriers  to  avoid  or  prevent 
the  negligent  acts  or  omissions  which  are  made  the 
basis  of  the  rights  of  recovery  which  the  statute 
creates  and  defines ;  and  as  whatever  makes  for  that 
end  tends  to  promote  the  safety  of  the  employees 
and  to  advance  the  commerce  in  which  they  are 
engaged,  we  entertain  no  doubt  that  in  making  these 
changes  Congress  acted  within  the  limits  of  the  dis- 
cretion confided  to  it  by  the  Constitution." 

But  the  act  passed  on  in  the  case  just  quoted  was 
only  an  employers'  liability  statute;  and  authorita- 
tive utterances  of  our  highest  tribunal  with  respect 


76        WORKMEN'S  COMPENSATION  AND  INSURANCE 

to  the  constitutionality  of  workmen's  compensation 
laws  were  long  delayed.  In  Jeffrey  Manufactur- 
ing Company  v.  Blagg,3T  in  1914,  the  Supreme 
Court  held  an  Ohio  compensation  law  valid;  but 
that  act  was  elective,  and  the  case  really  only  de- 
cided that  the  limitation  of  employers  who  would 
lose  the  defense  of  contributory  negligence  if  they 
did  not  come  under  the  act  to  those  with  five  or 
more  employees,  was  not  an  arbitrary  and  unreason- 
able classification.  It  was  said  in  the  opinion : 38 
"This  is  not  a  statute  which  simply  declares  that 
the  defense  of  contributory  negligence  shall  be 
available  to  employers  having  less  than  five  work- 
men, and  unavailable  to  employers  having  five  or 
more  in  their  service.  This  provision  is  part  of  a 
general  plan  to  raise  funds  to  pay  death  and  injury 
losses  by  assessing  those  establishments  which  em- 
ploy five  and  more  persons  and  which  voluntarily 
take  advantage  of  the  law.  Those  remaining  out 
and  who  might  come  in  because  of  the  number  em- 
ployed are  deprived  of  certain  defenses  which  the 
law  might  abolish  as  to  all  if  it  were  seen  fit  to  do 
so."  So  it  will  be  seen  that  the  Blagg  case  goes 
little  further  than  the  Second  Employers'  Liability 

**  235  U.  S.  571  (1914).  88  At  page  578  of  the  case. 


QUESTIONS  OF  CONSTITUTIONALITY  77 

Cases ;  in  addition  to  upholding  the  abolition  of  com- 
mon-law defenses,  it  merely  declares  that  a  purely 
elective  compensation  act  is  not  in  violation  of  the 
fundamental  law. 

In  January,  1916,  however,  in  the  case  of  North- 
ern Pacific  Railway  Co.  v.  Meese,39  a  compulsory 
compensation  law  finally  received  the  sanction  of 
the  United  States  Supreme  Court.  The  Washing- 
ton act,  in  making  compensation  the  exclusive  rem- 
edy for  injuries  sustained  at  a  certain  plant,  was 
held  not  to  violate  the  equal  protection  clause  of 
the  Fourteenth  Amendment. 

In  closing  this  review  of  the  important  cases  deal- 
ing with  the  constitutionality  of  workmen's  com- 
pensation laws,  it  is  fitting  that  the  decisions  in 
which  the  principle  was  finally  vindicated  in  New 
York  State,  the  scene  of  its  early  vicissitudes,  should 
be  referred  to.  The  opinion  of  Mr.  Justice  Miller, 
of  the  New  York  Court  of  Appeals,  in  Jensen  v. 
Southern  Pacific  Company,40  which  upheld  the 
validity  of  the  present  New  York  act,  is  so  illu- 
minating, and  so  thoroughly  in  accord  with  the 

3»239  U.  S.  614  (January,  1916). 

40  215  N.  Y.  514,  528  (July,  1915) ;  reversed  244  U.  S.  205,  but  not 
on  broad  constitutional  grounds,  only  the  attempted  extension  of  the 
act  to  admiralty  matters  within  the  federal  jurisdiction  being  con- 
demned. 


78        WORKMEN'S  COMPENSATION  AND  INSURANCE 

spirit  of  modern  labor  legislation,  that  I  have  ven- 
tured to  quote  from  it  at  sufficient  length  to  illus- 
trate the  line  of  reasoning  adopted : 

"This  subject  should  be  viewed  in  the  light  of 
modern  conditions,  not  those  under  which  the  com- 
mon-law doctrines  were  developed.  With  the 
change  in  industrial  conditions,  an  opinion  has  grad- 
ually developed,  which  almost  universally  favors 
a  more  just  and  economical  system  of  providing 
compensation  for  accidental  injuries  to  employees 
as  a  substitute  for  wasteful  and  protracted  damage 
suits,  usually  unjust  in  their  results  either  to  the 
employer  or  the  employee,  and  sometimes  to  both. 
Surely  it  is  competent  for  the  state  in  the  promotion 
of  the  general  welfare  to  require  both  employer 
and  employee  to  yield  something  toward  the  estab- 
lishment of  a  principle  and  plan  of  compensation 
for  their  mutual  protection  and  advantage.  Any 
plan  devised  by  the  wit  of  man  may  in  exceptional 
cases  work  unjustly,  but  the  act  is  to  be  judged  by 
its  general  plan  and  scope  and  the  general  good  to 
be  promoted  by  it.  Fortunately  the  courts  have 
not  attempted  to  define  the  limits  of  the  police 
power.  Its  elasticity  makes  progress  possible  un- 
der a  written  constitution  guaranteeing  individual 
rights.  The  question  is  often  one  of  degree.  The 


QUESTIONS  OF  CONSTITUTIONALITY  7» 

act  now  before  us  seems  to  be  fundamentally  fair  to 
both  employer  and  employee.  Of  course,  I  do  not 
speak  of  details,  which  may  or  may  not  be  open  to 
criticism,  but  which,  granting  the  validity  of  the 
underlying  principle,  are  plainly  within  the  prov- 
ince of  the  legislature.  It  is  not  open  to  the  ob- 
jections found  to  be  fatal  to  the  act  considered  in 
the  Ives  case.  It  is  plainly  justified  by  the  amend- 
ment to  our  own  State  constitution  and  the  decisions 
of  the  United  States  Supreme  Court,  notably  in  the 
Noble  State  Bank  case,  make  it  reasonably  certain 
that  it  will  be  found  by  that  court  not  to  be  violative 
of  the  Constitution  of  the  United  States." 

The  confidence  of  Mr.  Justice  Miller  that  the 
highest  tribunal  in  the  land  would  find  the  New 
York  act,  in  its  main  outlines,  not  violative  of  the 
fundamental  Constitutional  guarantees  was  justi- 
fied by  the  decision  in  New  York  Central  R.  R.  Co. 
v.  White.41  The  Jensen  case  itself,  however,  was 
reversed  by  the  Supreme  Court,  on  the  ground  that 
the  extension  of  the  provisions  of  the  compensation 
act  of  New  York  to  foreign  vessels  entering  her 
ports,  interfered  with  the  powers  of  Congress  over 
interstate  and  maritime  affairs.  The  general  valid- 

41243  U.  S.  188,  affirming  216  N.  Y.  653.    See  the  Consitutional 
Review,  vol.  II,  p.  27   (January,  1918). 


80       WORKMEN'S  COMPENSATION  AND  INSURANCE 

ity  of  the  act,  however,  as  settled  by  the  White  case, 
was  conceded.42 

There  may  well  be  doubt  as  to  whether  the  de- 
cisions upholding  the  constitutionality  of  the  pres- 
ent New  York  statute  are  reconcilable  with  the  Ives 
case.  As  a  recent  writer  has  pointed  out,  the  dif- 
ference between  the  acts  construed  only  accounts  in 
part  for  the  difference  in  the  result;  the  difficulty 
as  to  the  Fourteenth  Amendment  of  the  Federal 
Constitution  is  equally  present  in  both  cases.43 
But  whether  the  Court  of  Appeals  has  receded  from 
its  original  position  or  not,  the  fact  remains  that 
New  York  now  has  a  valid  compensation  law,  and 
one  which,  with  its  insurance  provisions  and  more 
equal  distribution  of  burdens,  is  better  than  its  pred- 
ecessor.44 

On  the  same  day  that  the  New  York  statute  was 
upheld  in  the  White  case  (March  6,  1917)  the  Su- 

*2  Southern  Pacific  Company  v.  Jensen,  244  U.  S.  205.  To  over- 
come the  effect  of  the  decision  so  far  as  the  admiralty  feature  is  con- 
cerned, an  act  of  Congress  has  been  passed  saving  to  claimants  their 
rights  under  state  compensation  laws  in  admiralty  cases.  Pub.,  No. 
82,  65th  Congress. 

«»  Bench  and  Bar,  vol.  10,  p.  397  (January,  1916).  Prof.  Powell, 
in  an  interesting  article,  has  intimated  that  the  Jensen  case  more 
properly  turned  on  the  application  of  the  Federal,  and  the  Ives  case 
on  the  State  constitution.  Journal  of  Political  Economy,  vol. 
XXXII,  pp.  549-550  (December,  1917). 

«*See  article  by  Miles  M.  Dawson  in  Case  and  Comment,  vol.  22, 
pp.  275-280  (September,  1915) ;  also  address  by  John  Mitchell  before 


QUESTIONS  OF  CONSTITUTIONALITY  81 

preme  Court  of  the  United  States  handed  down 
opinions  sustaining  the  acts  of  Iowa  and  Washing- 
ton. The  Iowa  decision 45  does  not  consider  major 
issues ; 46  but  the  result  reached  in  Mountain  Tim- 
ber Co.  v.  Washington,47  a  five  to  four  pronounce- 
ment in  favor  of  the  compensation  law  of  the  latter 
state,  is  of  the  deepest  interest. 

The  industries  of  the  state  of  Washington  are 
divided,  by  its  compensation  act,  into  classes,  on 
the  basis  of  their  hazardous  character;  and  each  em- 
ployer in  each  class  is  subjected  to  compulsory 
assessments  for  a  state  fund,  out  of  which  is  paid 
compensation  for  all  injuries  occurring  to  em- 
ployees in  that  class  of  establishments.  The  rates 
of  assessment  vary  with  the  degrees  of  hazard  in 
the  different  groups  of  industries;  and  reclassify- 
ing  and  readjustment  of  rates  are  provided  for. 

The  chief  difficulty  which  the  court  had  with  this 
statute  was  with  regard  to  the  reasonableness  of  the 
method  adopted  to  impose  the  cost  of  the  industrial 

the  American  Association  for  Labor  Legislation,  reprinted  in  the 
American  Labor  Legislation  Review,  vol.  5,  pp.  15-19  (March,  1915), 
in  which  Mr.  Mitchell  praises  the  success  of  the  New  York  act, 
which  he  says  pleases  both  employer  and  employee. 

45  Hawkins  v.  Bleakly,  243  U.  S.  210. 

«  Political  Science  Quarterly,  vol.  XXXII,  pp.  553-554  (December, 
1917). 

*7  243  U.  S.  219. 


82        WORKMEN'S  COMPENSATION  AND  INSURANCE 

injuries  on  the  employers;  but  Mr.  Justice  Pitney 
repelled  the  suggestion  that  the  losses  in  any  given 
class  might  be  so  heavy  that  the  assessments  re- 
quired from  employers  in  that  class  would  leave  no 
sufficient  margin  for  reasonable  profits,  by  remark- 
ing that  any  industry  in  which  the  "human 
wastage"  was  so  great  might  be  prohibited  alto- 
gether. This,  as  has  been  pointed  out,  is  "a  signifi- 
cant rebuke  to  one  of  the  arguments  by  which  the 
common  law  of  assumption  of  risks  used  to  be  sup- 
ported— the  argument  that  if  employers  rather  than 
employees  were  compelled  to  assume  the  risk,  busi- 
ness could  not  be  carried  on." 48  The  decision  is  the 
final  vindication  before  the  highest  tribunal  of  the 
land  of  the  compulsory  state  insurance  idea  as  ap- 
plied to  the  field  of  industrial  accidents.  It  opens 
the  way  for  the  free  expansion  of  the  principle  in 
the  legislation  of  the  United  States. 

Questions  of  constitutionality  are  not  now  of  as 
vital  interest  as  they  were  a  few  years  ago.     The 

«  Prof.  Thomas  Reed  Powell,  in  Quarterly  Journal  of  Economics, 
vol.  XXXII,  pp.  561-562  (December,  1917).  The  reasoning  of  the 
court  in  the  Mountain  Timber  case  was  a  little  devious;  thus,  the  act 
was  said  to  be  in  part  an  "occupation  tax*'  on  certain  forms  of  in- 
dustry, in  part  a  plan  for  industrial  pensions,  and  valid  as  a  proper 
exercise  of  the  taxing  power  as  well  as  a  reasonable  regulation  of 
industry.  The  four  dissenting  judges  did  not  indicate  their  ground 
of  disagreement.  See  The  Constitutional  Review,  voL  II,  p.  28  (Jan- 
uary, 1918). 


QUESTIONS  OF  CONSTITUTIONALITY  83 

increasing  acquiescence  of  all  classes  of  men  in  the 
wisdom  of  providing  for  the  victims  of  industrial 
accidents  by  means  of  some  form  of  insurance  has 
had  a  profound  effect  on  the  judicial  attitude  to- 
wards the  subject.  So,  whether  the  bill  prepared 
by  the  legislature  creates  a  state  insurance  fund,  or 
merely  fixes  the  liability  of  the  employer,  leaving 
the  various  actuarial  problems  to  be  worked  out 
by  private  companies,  the  courts  have  shown  an  in- 
creasing readiness  to  accept  the  proposed  solution 
of  a  difficult  branch  of  the  labor  problem  at  its  own 
valuation.  And  if  it  be  true,  as  has  been  asserted, 
that  "no  state  or  country  has  ever  reverted  to  the 
liability  system  after  having  made  trial  of  the  prin- 
ciple of  compensation," 49  judicial  interference, 
where  it  occurs,  is  likely  to  have  no  more  profound 
effect  than  to  put  a  temporary  check  on  an  en- 
thusiasm that  will  not  be  restrained,  to  delay  for  a 
brief  space  the  advance  of  inevitable  progress. 

4»  Journal   of  Political   Economy,  voL   XXIII,  p.   821    (October, 
1915). 


CHAPTER  IV 

COMPENSATION  LEGISLATION  IN  THE 
UNITED  STATES 

IN  an  essay  of  this  scope  and  character,  an  ex- 
haustive review  of  the  manifold  provisions  of  the 
workmen's  compensation  acts  now  in  force  in  thirty- 
eight  states  and  three  territories  would  be  inappro- 
priate. Concise  digests,  easily  available  to  the  stu- 
dent, are  infinitely  preferable  for  reference  work; 
nor  could  we  hope  to  present  the  vast  mass  of  ma- 
terial in  a  form  at  all  comprehensible  without  adopt- 
ing the  tabular  digest  method.  In  the  present 
chapter,  therefore,  the  writer  has  merely  under- 
taken to  compare  important  and  typical  features  of 
laws  in  force  in  different  jurisdictions,  with  a  view 
to  giving  the  reader  a  good  general  idea  of  the  form 
and  extent  of  such  legislation  in  this  country,  and 
indicating  the  points  of  difference  which  have  given 
rise  to  the  major  problems  of  the  subject.  For 
clearness'  sake,  the  discussion  in  each  of  the  follow- 
ing sections  has  been  limited  to  the  topic  given, 

84 


COMPENSATION  LEGISLATION  85 

though,  of  course,  the  divisions  are  arbitrary  and  the 
subjects  inter-related. 

(1)  Employments  Covered.  The  New  Jersey 
Act  automatically  extends  to  a  larger  group  of  em- 
ployments than  the  compensation  law  of  any  other 
state.1  All  private  employments  are  covered,  ex- 
cept casual  ones ;  and  all  public  employments  except 
elective  officials  and  those  receiving  a  salary  of  more 
than  $1,200  a  year.  The  Act  is  unique  in  that  it 
extends  to  domestic  and  farm  labor,  branches  of 
service  to  which  legislatures  have  been  reluctant  to 
apply  the  workmen's  compensation  principle.  The 
Federal  Compensation  Law  alone  is  of  broader  ap- 
plication, covering  all  civil  employees  of  the  United 
States  Government.1* 

The  provisions  of  the  various  state  statutes  in 
this  connection  are  of  two  general  kinds.  One 
group  consists  of  the  laws  which  have  been  framed 
with  the  old  theory,  the  theory  that  lay  back  of  the 

i  In  making  this  statement  the  author  has  taken  into  consideration 
the  semi-compulsory  nature  of  the  New  Jersey  act,  which  applies 
automatically  to  all  employments  covered,  though  the  presumption 
of  acceptance  may  be  overcome  by  notice  in  writing  to  the  contrary. 
Many  states  permit  all  labor  contracts  to  be  made  under  the  pro- 
visions of  the  compensation  law  if  the  parties  so  agree  in  writing, 
though  the  statutes  apply  automatically  to  none  or  only  a  limited 
class.  See,  e.  g.,  Michigan  Public  Acts  1912  (1st  Extra  Session),  No. 
10,  Pt.  I,  sees.  5,  7;  Idaho  Laws  1917,  c.  81,  sees.  2-3. 

ia  Blanchard,  Liability  and  Compensation  Insurance,  p.  108. 


86        WORKMEN'S  COMPENSATION  AND  INSURANCE 

original  New  York  act,  in  mind — namely,  that  men 
engaged  in  extra-hazardous  occupations  are  en- 
titled to  special  favor,  and  that  they  should  be  com- 
pensated as  a  matter  of  right  for  injuries  sustained 
in  the  course  of  their  work,  while  employees  sub- 
jected to  no  unusual  hazard  should  be  left  to  the 
ordinary  legal  remedies.  The  other  group  of  laws 
discards  this  theory,  and  gives  to  the  compensation 
principle  a  general  application,  though  excepting 
certain  limited  classes  of  employments  for  reasons 
of  policy  or  convenience. 

The  author  has  argued  to  no  purpose  if  he  has 
not  already  convinced  the  reader  that  the  narrow 
view  taken  by  the  framers  of  the  first  group  of 
statutes  is  an  erroneous  one.  Mere  degree  of  haz- 
ard in  the  employment  should  not  be  the  criterion  of 
whether  a  workman  actually  disabled  should  be  re- 
lieved or  not ;  reasons  couched  in  social  necessity  and 
profound  economic  principle  demand  that  work- 
men's compensation  be  extended  to  all  phases  of 
industrial  life.  Nevertheless,  a  surprising  number 
of  states  cling  to  the  old  discredited  theory.  In 
New  York  the  legislature  has  undertaken  the  tre- 
mendous task  of  enumerating  the  hazardous  em- 
ployments in  which  it  feels  compensation  should  be 
permitted,  and  has  already  discovered  44  distinct 


COMPENSATION  LEGISLATION  87 

groups  of  such  occupations.2  The  Kansas  law- 
makers are  content  with  a  more  general  description 
of  dangerous  occupations,  and  have  so  denomi- 
nated all  employments  (in  which  5  or  more  are  en- 
gaged) carried  on  "in  or  about  a  railway,  factory, 
mine  or  quarry,  electric,  building  or  engineering 
work,  laundry,  natural  gas  plant,  county  and  muni- 
cipal work,  and  all  employments  wherein  a  process 
requiring  the  use  of  any  dangerous  explosive  or 
inflammable  materials  is  carried  on,  which  is  con- 
ducted for  the  purpose  of  business,  trade  or  gain."  3 
The  opposite  extreme  is  reached  in  Alaska,  where 
compensation  is  provided  for  only  in  employments 
connected  with  mining  operations  in  which  5  or 
more  are  engaged.4 

The  immense  possibilities  of  litigation  under 
statutes  like  those  we  have  just  discussed  will  at 
once  occur  to  the  reader.  The  line  of  distinction  be- 
tween affiliated  groups  of  industries  is  often  ill- 
defined,  and  cases  are  almost  certain  to  arise  in  any 
jurisdiction  which  has  sought  to  enumerate  the  "ex- 
tra-hazardous" industries,  in  which  an  employee  in- 

2  N.  Y.  Laws  1913,  c.  816,  sec.  2,  as  amended  by  Laws  1916,  c.  622, 
and  Laws  1917,  c.  705. 

»  Kan.  Gen.  Stat.  1915,  sees.  5900-5903,  as  amended  by  Kan.  Laws 
1917,  c.  226. 

*  Alaska  Laws  1915,  c.  71,  sees.  1,  38-39. 


88        WORKMEN'S  COMPENSATION  AND  INSURANCE 

jured  in  a  similar,  perhaps  more  dangerous,  line  of 
work,  seeks  to  bring  himself  under  the  act.  An- 
other weakness  is  that  any  enumeration  is  bound  to 
be  incomplete,  since  new  industries  spring  up  al- 
most overnight;  and  the  legislatures  will  be  kept 
busy  revising  the  lists.  Moreover,  the  very  theory 
on  which  these  acts  are  based  is  bound  to  be  trans- 
gressed. For  example,  the  Kansas  act,  in  enumer- 
ating hazardous  occupations,  includes  all  those  car- 
ried on  in  a  "factory,"  whereas  it  is  a  matter  of 
common  knowledge  that  the  factories  in  certain 
lines  of  business  where  little  machinery  is  used,  are 
among  the  least  dangerous  working-places  in  the 
entire  industrial  field. 

By  far  the  larger  number  of  workmen's  compen- 
sation states,  however,  have  followed  the  more  lib- 
eral policy  of  including  all  employments  except 
those  expressly  excluded.  The  New  Jersey  act, 
as  we  have  seen,  is  the  most  sweeping  in  this  respect ; 
although  Massachusetts,  which  includes  all  private 
employments  in  the  usual  course  of  trade  or  busi- 
ness of  the  employer,  except  on  vessels  engaged  in 
foreign  or  interstate  commerce,  and  also  includes 
public  employments  under  the  commonwealth,  and 
elsewhere  where  the  municipality,  county,  or  other 
employer  consents,  runs  New  Jersey  a  close  second 


COMPENSATION  LEGISLATION  89 

in  liberality.5  The  compensation  law  of  Michigan 
does  not  apply  automatically,  but  requires  an  act 
of  election  on  the  part  of  the  employer;  otherwise 
this  statute  would  have  the  palm  for  covering  the 
widest  range  of  employments,  all  public,  except  as 
officials,  and  all  private,  except  casual  or  not  in  the 
usual  course  of  trade,  business,  etc.,  of  the  em- 
ployer, being  included.6 

An  almost  universal  tendency  to  treat  certain 
occupations  as  outside  the  proper  scope  of  a  work- 
men's compensation  act  is  observable.  Chief 
among  these  exclusions,  and  the  cause  of  much 
wrangling,  are  two  classes  of  employment  com- 
monly grouped  together — farm  labor  and  domestic 
service.  Among  others,  the  statutes  of  Idaho, 
Iowa,  Minnesota,  South  Dakota,  Texas  and  Utah 
refuse  compensation  to  the  farmhand  and  the  house- 
hold servant.7  The  reasons  for  such  exclusion  seem 

6  Mass.  Acts  1911,  c.  751,  Pt.  V,  sec.  2,  as  amended  b7  Acts  1913, 
c.  568,  and  Acts  1914,  c.  708;  also  Acts  1913,  c.  807. 

«MicE.  Pub.  Acts  1912  (1st  Extra  Session),  No.  10,  Pt  I,  sees.  5,  7. 

t  Idaho  Laws  1917,  c.  81,  sees.  2-3;  Iowa  Code,  1913  Supplement, 
sec.  2477  m  (a),  m  16  (a)  (b),  as  amended  by  Laws  1917,  c.  418, 
270;  Minn.  Gen.  Stat  1913,  sees.  8202,  8230d,  g,  as  amended  by  Laws 
1915,  c.  193,  209;  So.  Dak.  Laws  1917,  c.  376,  sees.  8,  16,  55b;  Tex. 
Laws  1913,  c.  179,  Pt.  I,  sec.  2,  Pt.  IV,  sec.  1,  as  amended  by  Laws 
1917,  c.  103;  Utah  Laws  1917,  c.  100,  sees.  51-52.  The  exemption 
of  agricultural  and  other  groups  of  employments  from  the  compen- 
sation acts  is  probably  due  in  large  measure  to  politics.  Rhodest 
Workmen's  Compensation,  p.  136. 


90        WORKMEN'S  COMPENSATION  AND  INSURANCE 

to  be  that  labor  of  this  sort  is  ordinarily  migratory 
and  uncertain;  that  the  employer  is  commonly  a 
small  householder  or  farmer  with  limited  means  and 
hence  seldom  in  a  position  to  pay  out  large  sums  in 
compensation;  that  the  close  personal  relationship 
existing  between  such  classes  of  servants  and  their 
masters  makes  it  possible  to  apply  with  little  diffi- 
culty the  common-law  tests  of  comparative  fault — 
in  short,  reasons  of  convenience.  In  reply  it  may 
be  said  that  the  difficulty  owing  to  the  comparative 
poverty  of  the  employer  may  be  solved  by  making 
him  carry  insurance,  the  premiums  of  which  would 
be  small  in  proportion  to  the  smallness  of  the  risk 
and  the  brevity  of  the  term  of  the  employment ;  that 
there  is  no  difference  in  principle  between  an  injury 
received  in  running  a  threshing-machine  and  one 
sustained  in  operating  a  loom — both  ought  to  be 
compensated;  and  that  the  argument  rising  from 
the  personal  relationship  of  employer  and  employee 
is  inapplicable  to  large-scale  farming,  and,  often, 
to  pretentious  domestic  establishments. 

Casual  employments,  or  those  not  in  the  ordinary 
course  of  the  trade  or  business  of  the  employer,  are 
excluded  from  practically  all  American  compensa- 
tion acts.8  The  writer  has  elsewhere  stated  his 

8  See  e.  g.,  Del.  Laws  1917,  c.  233,  par.  3193qq,  sec.  136;  N.  J.  Laws 


COMPENSATION  LEGISLATION  91 

reasons  for  maintaining  that  such  employees  are 
entitled  to  as  much  consideration  as  those  whose 
work  is  of  a  more  permanent  or  regular  nature. 
The  fact  remains,  however,  that  the  opposite  view 
has  commended  itself  to  nearly  all  American  legis- 
latures.9 

Some  states  have  deemed  it  advisable  to  avoid 
conflicts  with  the  Federal  workmen's  compensation 
act  by  excluding  from  the  operation  of  the  local 
statutes  employees  on  railroads,  or  vessels  in  inter- 
state or  foreign  commerce.10  More  commonly, 
however,  the  method  followed  to  avoid  jurisdic- 
tional  complications  is  to  declare  the  state  law  in- 
operative in  cases  to  which  the  Federal  law  ex- 
tends.11 

In  addition  to  the  more  general  classes  of  ex- 
cluded employments  which  we  have  discussed,  the 
idiosyncrasies  of  law-makers,  or  the  peculiar  condi- 

1911,  c.  95,  par.  23;  Minn.  Gen.  Stat.  1913,  sec.  8202,  as  amended  by 
Laws  1915,  c.  193;  Utah  Laws  1917,  c.  100,  sec.  51  (2). 

»  Nevada  seems  to  be  an  exception.  Nev.  Laws  1913,  c.  Ill,  sees. 
1,  43,  as  amended  by  Laws  1915,  c.  190. 

10 See,  e.g.,  Mass.  Acts  1911,  c.  751,  Pt.  V,  sec.  2,  as  amended  by 
Acts  1913,  c.  568,  and  Acts  1914,  c.  708;  Minn.  Gen.  Stat.  1913,  sec. 
8202,  as  amended  by  Laws  1915,  c.  193;  Tex.  Laws  1913,  c.  179,  Pt. 
I,  sec.  2,  as  amended  by  Laws  1917,  c.  103. 

"See,  e.g.,  Del.  Laws  1917,  c.  233,  par.  3193ww,  sec.  142;  Idaho 
Laws  1917,  c.  81,  sec.  109;  New  Mex.  Laws  1917,  c.  83,  sec.  11;  So. 
Dak.  Laws  1917,  c.  376,  sec.  17. 


93        WORKMEN'S  COMPENSATION  AND  INSURANCE 

tions  in  certain  states,  have  given  rise  to  a  number 
of  anomalous  exclusions,  which  have  found  favor 
only  in  a  few  jurisdictions.  The  Iowa  law,  for 
example,  excludes  employees  "engaged  in  clerical 
work  only,"  and,  by  an  amendment  of  1917,  per- 
sons receiving  benefits  from  any  "firemen's  pension 
fund"  or  "policemen's  pension  fund."  12  Workers 
for  charitable  organizations  are  excluded  in  some 
states,13  outworkers  14  and  members  of  the  employ- 
er's family  living  in  his  house  15  in  others.  A  very 
common  provision  is  that  employers  with  less  than 
a  certain  number  of  workmen — variously  fixed  at 
three,  four  or  five — are  not  bound  by  the  compensa- 
tion law,  though  they  may  elect  to  come  under  its 
provisions.16  For  reasons  which  we  have  already 
outlined,  these  distinctions  based  obviously  on  the 
employer's  conjectural  ability  to  pay  seem  to  us 
unsound. 

Where  public  employments  are  covered  by  the 

12  Iowa  Code,  1913  Supplement,  sec.  2477  m  (a),  m  16  (b),  as 
amended  by  Laws  1917,  c.  270,  418. 

is  See,  e.  g.,  Idaho  Laws  1917,  c.  81,  sec.  3. 

"See,  e.g.,  Del.  Laws  1917,  c.  233,  par.  3193qq,  sec.  136;  Idaho 
Laws  1917,  c.  81,  sec.  3;  Conn.  Laws  1913,  c.  138,  sec.  43,  as  amended 
by  Laws  1915,  c.  288. 

IB  See,  e.  g.,  Idaho  Laws  1917,  c.  81,  sec.  3. 

"See,  e.g.,  Rhode  Island  Laws  1912,  c.  831,  sec.  3;  Utah  Laws 
1917,  c.  100,  sec.  51;  Tex.  Laws  1913,  c.  179,  sec.  2,  as  amended  by 
Laws  1917,  c.  103. 


COMPENSATION  LEGISLATION  93 

compensation  acts — and  this  is  true  in  most  states — 
the  policy  has  generally  been  to  exclude  elective 
officials,  and  very  often  those  receiving  more  than  a 
certain  sum  as  yearly  salary.17  The  writer  is  at  a 
loss  to  determine  what  has  actuated  the  first  of 
these  distinctions,  unless  it  be  a  vague  fear  that 
compensation  acts  might  become  involved  in  poli- 
tics, or  some  intricate  theory  that  there  is  no  real 
wage  loss  in  such  cases.  The  reason  for  the  exclu- 
sion of  the  high-salaried  man  is  less  obscure,  as  such 
an  one  is  deemed  to  be  so  high  on  the  social  scale, 
and  to  have  had  such  opportunities  to  save  and  to 
insure  himself,  that  there  are  not  such  strong  rea- 
sons of  public  policy  for  protecting  him  as  in  the 
case  of  the  indigent  workman.  Even  conceding 
this,  however,  it  is  hard  to  see  any  occasion  for  mak- 
ing a  distinction  on  such  purely  artificial  grounds, 
especially  as  the  public  should  be  a  model  employer. 
The  writer  would  like  to  be  able  to  say  that  the 
trend  of  recent  legislation  has  been  distinctly  away 
from  the  narrow  type  of  workmen's  compensation 
act,  and  towards  a  more  and  more  extensive  appli- 
cation of  the  theory  of  professional  risk;  but  such 
a  statement  would  hardly  be  borne  out  by  the  facts. 
Five  states  adopted  compensation  laws  for  the  first 

IT  See,  e.  g.,  N.  J.  Laws  1913,  c.  145;  Utah  Laws  1917,  c.  100,  sec.  51. 


94        WORKMEN'S  COMPENSATION  AND  INSURANCE 

time  in  1917 — Delaware,  Idaho,  New  Mexico, 
South  Dakota  and  Utah.18  Of  these,  New  Mexico 
followed  the  antiquated  scheme  of  covering  only 
enumerated  extra-hazardous  employments;  New 
Mexico  and  Utah  extended  compensation  pro- 
visions to  private  employments  only  when  four,  and 
Delaware  when  five,  or  more  were  employed;  all 
five  states  excepted  casual  employees;  while  farm 
labor  and  domestic  service  were  expressly  excluded 
by  Delaware,  Idaho,  New  Mexico  and  South  Da- 
kota. Outworkers  are  excepted  in  Delaware  and 
Idaho;  and  the  last-named  state  also  excludes  em- 
ployees of  charitable  organizations  and  members 
of  the  employer's  family  dwelling  in  his  house. 
Delaware  makes  no  provision  for  public  employ- 
ments; South  Dakota  covers  them  subject  to  sub- 
stantially the  same  restrictions  as  in  the  case  of 
private  occupations;  Idaho  and  Utah  grant  com- 
pensation to  all  public  servants  except  elective  of- 
ficials and  those  whose  salary  exceeds  $2,400  a  "year. 
(2)  Injuries  covered.  The  phrase  used  in  the 
English  act — "injury  by  accident  arising  out  of 
and  in  the  course  of  the  employment" — has  been 
adopted  in  most  of  the  American  states.  That  it 

i»DeL  Laws  1917,  c.  233;  Idaho  Laws  1917,  c.  81;  New  Mex.  Laws 
1917,  c.  83;  So.  Dak.  Laws  1917,  c.  376;  Utah  Laws  1917,  c.  100. 


COMPENSATION  LEGISLATION  95 

is  open  to  serious  criticism  as  a  description  of  the 
policy  of  the  acts,  has  been  intimated  in  an  earlier 
chapter;  but  "the  full  expression  has  been  inter- 
preted so  generously  in  British  and  American 
courts  that  it  permits  awards  for  nearly  or  quite  all 
disabilities,  which  can  be  traced  to  the  employment 
of  the  disabled."  19  For  instance,  awards  have  been 
given  for  death  by  the  unintended  acts  of  another 
employer's  servant,20  death  of  an  ice-driver  by  light- 
ning while  seeking  shelter  under  a  tree,21  and  injury 
due  to  a  fellow-employee's  disobedience  of  a  fore- 
man's orders.22  But  the  general  subject  has  been 
covered  already  in  our  consideration  of  the  British 
Act;  and  it  will  be  more  useful  here  to  discuss 
special  features,  such  as  the  provision  made  by 
American  acts  in  the  case  of  injuries  due  to  indus- 
trial disease. 

So  liberal  has  been  the  judicial  interpretation  of 
the  terms  "injury"  and  "personal  injury,"  that 
where  they  are  used  without  further  qualification 
they  will  generally  be  construed  to  include  both 

i»  Willard  C.  Fisher  in  Quarterly  Journal  of  Economics,  vol.  XXX, 
p.  32  (November,  1915). 

20  Bryant  v.  Fissel,  86  A&  (N.  J.)  458. 

»i  State  ex  rel.  People's  Coal  and  Ice  Co.  v.  District  Court  of 
Ramsay  County,  153  N.  W.  119. 

22  Scott  v.  Payn  Bros.,  89  Atl.  (N.  J.)  927. 


96        WORKMEN'S  COMPENSATION  AND  INSURANCE 

disease  and  aggravation  of  existing  disease.23  But 
the  requirement  of  accidental  origin  has  limited  the 
cases  in  which  compensation  can  be  recovered  for 
disease  arising  out  of  the  employment  to  those  in 
which  the  contraction  of  it  can  be  traced  to  a  par- 
ticular mishap ;  and  there  are  many  specific  restric- 
tions in  the  various  statutes.  Thus,  in  Hawaii, 
disease  is  expressly  excluded  unless  it  results  from 
injury;  and  similar  provisions  are  found  in  Indiana, 
Iowa,  Delaware,  Utah,  South  Dakota,  and  most  of 
the  states  except  those  which,  like  Kansas,  Michi- 
gan, Minnesota,  Massachusetts,  and  New  Jersey, 
are  silent  on  the  subject.24  Special  provisions  as 

23  Fisher  (see  footnote  19),  at  pages  46-47.  But  a  disease  which 
is  idiopathic — *.  e.,  develops  gradually  or  at  least  imperceptibly  and, 
while  it  may  be  attributable  to  external  conditions,  is  also  in  part 
dependent  on  conditions  inherent  in  the  individual — cannot  be  re- 
garded as  an  injury  by  accident;  there  is  also  very  strong  authority 
against  compensating  for  purely  occupational  diseases  even  when  the 
act  makes  no  reference  to  a  necessity  of  accidental  origin.  Kiser, 
Workmen's  Compensation  Acts,  pp.  65-67. 

2*  Hawaii  Acts  1915,  No.  221,  section  60d;  Indiana  Laws  1915,  c. 
106,  sec.  76d;  Iowa  Code,  1913  Supplement,  sec.  2477-m  16  (g);  Del. 
Laws  1917,  c.  233,  par.  3193ss,  sec.  138  (c) ;  Utah  Laws  1917,  c.  100, 
sec.  52  (5);  So.  Dak.  Laws  1917,  c.  376,  sec.  55d.  Kan.  Gen.  Stat. 
1915,  Chapter  61,  Article  6,  as  amended  by  Laws  1917,  c.  226;  Mich. 
Pub.  Acts  1912  (First  Extra  Session),  No.  10,  as  amended  by  Pub. 
Acts  1913,  Nos.  50,  79,  156,  259,  and  Pub.  Acts  1915,  Nos.  104,  153, 
170,  171,  and  Pub.  Acts  1917,  Nos.  41,  206,  235,  249;  Minn.  Laws  1913, 
c.  467,  as  amended  by  Laws  1915,  c.  193,  209,  and  Laws  1917,  c.  302, 
351;  Mass.  Acts  1911,  c.  751,  amended  in  accordance  with  Acts  1912, 


COMPENSATION  LEGISLATION  97 

to  injury  resulting  in  hernia  are  found  in  Idaho, 
New  Mexico,  Texas,  and  some  other  states.25 
Montana  excludes  disease  entirely,  except  hernia.26 
In  a  few  states,  the  policy  of  compensating  cases 
of  disease  resulting  from  injury  of  an  accidental 
nature  has  been  affirmatively  declared;  but  Cali- 
fornia alone  frankly  includes  occupational  dis- 
ease.27 

It  will  be  seen  that  the  legislatures  have  shown 
little  eagerness  to  extend  the  compensation  prin- 
ciple along  these  lines.  The  most  liberal  of  the 
statutes  (outside  of  that  of  California)  are 
merely  declaratory  in  this  respect  of  the  common 
law,  which  includes  within  the  definition  of  "ac- 
cidental injury"  disease  and  infection  naturally 
resulting  therefrom.  From  the  point  of  view  of 
social  justice  this  is  most  unfortunate.  An  em- 
ployee in  a  paint  factory  is  much  more  likely  to 

c.  172,  571,  Acts  1913,  c.  48,  445,  448,  568,  696,  746,  Acts  1914,  c.  338, 
708,  Acts  1915,  c.  123,  275,  314,  Acts  1917,  c.  198,  249,  269,  297;  N.  J. 
Laws  1911,  c.  95,  as  amended  by  Laws  1913,  c.  174,  Laws  1914,  c.  244. 

25  Idaho  Laws  1917,  c.  81,  sec.  22;  New  Mex.  Laws  1917,  c.  83,  sec. 
17;  Tex.  Laws  1913,  c.  179,  sec.  12b  (as  added  by  Laws  1917,  c.  103); 
«tc. 

26  Mont.  Laws  1915,  c.  96,  sees.  6q,  16,  16j. 

27  See,  e.  g.,  Tex.  Laws  1913,  c.  179,  Pt.  IV,  sec.  1,  as  amended  by 
Laws  1917,  c.  103;  N.  Y.  Consol.  Laws,  c.  67,  sec.  3  (7).    Cal.  Laws 
1917,  c.  586,  sec.  3  (4). 


98         WORKMEN'S  COMPENSATION  AND  INSURANCE 

contract  a  case  of  lead  poisoning  than  to  be  disabled 
by  a  fall;  the  disease  is  as  serious  or  more  so  than 
the  accident;  it  arises  out  of  and  in  the  course  of 
his  employment;  it  results  in  a  loss  of  earning 
power;  and  yet  he  will  receive  no  compensation 
under  American  laws.  The  danger  of  contracting 
an  occupational  disease  is  just  as  much  a  risk  of  the 
employment  in  which  a  workman  is  engaged,  as  a 
tangible  physical  injury;  it  is  accidental  in  the 
broad  sense  that  in  most  cases  it  cannot  be  foreseen ; 
and  if  the  theory  of  professional  risk  is  sound,  the 
industry  should  bear  the  burden  of  compensating 
the  victims  as  well  of  the  diseases  as  of  the  accidents 
for  which  it  is  responsible. 

Courts  and  special  tribunals,  of  a  progressive 
cast,  have  in  a  few  instances  rendered  decisions 
which  may  be  construed  as  awarding  compensation 
for  occupational  diseases  accidentally  contracted, 
on  the  theory  that  these  really  constitute  accidental 
injuries; 28  but  the  weight  of  judicial  opinion,  and, 

28  See  The  Labor  Gazette,  vol.  1,  p.  53  (February,  1916),  com- 
menting on  a  decision  of  the  Department  of  Labor  of  this  sort;  also 
In  re  Doherty  (1915)  222  Mass.  98,  109  N.  E.  887.  The  eventual 
coverage  of  occupational  diseases  by  compensation  acts,  "either  by 
express  legislation  or  by  construction  of  the  law,  may  be  regarded 
as  only  a  logical  development."  Rhodes,  Workmen's  Compensation, 
p.  137. 


COMPENSATION  LEGISLATION  99 

it  must  be  admitted,  of  sound  judicial  opinion,  is 
against  thus  distorting  the  language  of  the  stat- 
utes.29 If  the  great  reform  of  adding  occupational 
disease  to  the  subjects  of  compensation  is  to  be  ac- 
complished, our  legislatures  must  follow  the  lead  of 
England  and  other  progressive  nations  in  enacting 
it  into  law. 

Though  most  of  our  states  have  been  satisfied 
with  the  borrowed  formula  of  "personal  injuries 
arising  out  of  and  in  the  course  of  the  employment," 
a  few  have  added  to  or  amended  it  in  describing  the 
class  of  injuries  covered.  Thus,  in  Arizona  the 
injury  must  also  be  due  to  a  necessary  risk  of  the 
employment  or  to  the  failure  of  the  employer  or  any 
of  his  employees  to  exercise  due  care  or  comply 
with  any  law.30  In  Colorado,  the  workman  must 
have  been  performing  service  arising  out  of  and  in 
the  course  of  the  employment  when  injured  to  be 
entitled  to  compensation.31  The  Oregon  act  in- 
sists that  the  injury  shall  be  by  violent  or  external 
means;  while  in  Washington  only  personal  injuries 
sustained  while  upon  the  premises  or  at  the  plant 

2»  Honnold,  Workmen's  Compensation,  pp.  536-544;  Kiser,  Work- 
men's Compensation  Acts,  p.  69. 

so  Ariz.  Rev.  Stat.  1913,  p.  1054,  sec.  2. 
si  Colo.  Laws  1915,  c.  179,  sec.  8. 


100      WORKMEN'S  COMPENSATION  AND  INSURANCE 

of  the  employer,  or  in  the  course  of  the  employ- 
ment away  from  the  plant,  will  sustain  a  claim.32 
In  Wisconsin,  compensation  will  be  paid  only  to 
those  workmen  who  were  engaged  at  the  time  of  the 
injury  in  performing  service  growing  out  of  and 
incidental  to  the  employment.33  It  will  be  seen 
that  most  of  these  variations  on  the  old  theme  add 
little  to  it ;  their  presence  in  the  statutes  is  no  doubt 
due  to  attempts  on  the  part  of  inexpert  draftsmen 
to  make  their  meaning  unmistakably  clear. 

(3)  Forfeiture  for  misconduct.  Under  almost 
all  of  the  American  statutes,  some  sort  of  miscon- 
duct on  the  part  of  the  injured  employee  will  pre- 
vent him  from  recovering  compensation.  The  two 
instances  in  which  awards  are  most  commonly  de- 
nied are:  (1)  where  the  employee's  intoxication 
was  a  proximate  and  efficient  cause  of  the  injury; 
(2)  where  the  injury  was  self-inflicted.  In  addi- 
tion, "willful  misconduct,"  consisting  in  disobedi- 
ence of  orders,  failure  to  use  safety  appliances,  de- 
liberate breach  of  statutory  regulations,  and 
culpable  negligence,  is  sometimes  made  a  cause  of 
forfeiture. 

A  rather  unusual  form  of  restriction  is  the  pro- 

82  Ore.  Laws  1913,  sec.  21;  Remington  and  Ballinger's  Ann.  Codes 
and  Stat.  Wash.,  sec.  6604-5. 
as  Wis.  Laws  1913,  c.  599,  sec.  2394-3. 


COMPENSATION  LEGISLATION  101 

vision  in  the  Colorado  statute  that  injuries  inten- 
tionally inflicted  by  self  or  another  are  not  subject 
to  compensation.34  The  reason  for  excepting  the 
latter  class  of  cases  from  the  operation  of  the  act  is 
by  no  means  clear,  for  injuries  intentionally  in- 
flicted by  another  often  arise  out  of  and  are  due  to 
risks  peculiar  to  an  employment.  For  example,  a 
"bouncer"  in  a  cafe  who  threatens  to  eject  an  ob- 
streperous customer,  and  is  thereupon  assaulted  by 
the  latter,  sustains  injuries  arising  out  of  and  in 
the  course  of  his  employment  in  the  fullest  sense  of 
the  word.  Perhaps  the  Colorado  statute  would 
deny  such  an  one  compensation  on  the  ground  that 
he  has  a  remedy  in  damages  against  the  assaulting 
party;  but  the  worthlessness  of  this  claim  in  the 
typical  case  is  the  best  reason  for  permitting  a 
recovery  of  compensation  from  the  employer  whose 
business  is  of  such  a  character  as  to  subject  his 
workmen  to  risk  of  assault  by  irresponsible  third 
parties. 

A  more  reasonable  provision  is  that  of  the  Okla- 
homa statute,  which  denies  compensation  where  the 
injury  is  caused  by  intention  to  injure  self  or  an- 
other.35 Self-inflicted  injuries  are  clearly  outside 

34  Colo.  Laws  1915,  c.  179,  sec.  8. 

SB  Okla.  Laws  1915,  c.  246,  Art.  II,  sec.  1. 


102      WORKMEN'S  COMPENSATION  AND  INSURANCE 

the  scope  of  the  workmen's  compensation  principle, 
for  they  are  quite  exceptional  and  in  no  wise  re- 
sults of  a  risk  of  the  employment.  In  most  cases, 
too,  injuries  to  the  employee  caused  by  his  intention 
to  injure  another  cannot  be  said  to  arise  out  of  the 
employment.  There  may  be  instances  in  which  this 
is  not  true ;  but  public  policy  would  seem  to  forbid 
the  award  of  compensation  in  such  cases  on  the 
ground  that  it  would  amount  to  condoning  an  as- 
sault. However  that  may  be,  the  provisions  of  the 
Oklahoma  statute  are  substantially  duplicated  in 
the  acts  in  force  in  Alaska,  Delaware,  Hawaii, 
Idaho,  New  York,  Texas,  and  a  number  of  other 
jurisdictions.36  Statutes  excluding  injuries  "in- 
tentionally self-inflicted,"  "by  deliberate  intention," 
and  so  forth,  but  making  no  mention  of  those  sus- 
tained by  reason  of  intention  to  injure  another, 
have  been  adopted  in  Louisiana,  Maryland,  Minne- 
sota, New  Jersey,  New  Mexico,  and  other  states.37 
The  vague  phrase  "serious  and  willful  miscon- 

»•  Alaska  Laws  1915,  c.  71,  sec.  4;  Del.  Laws  1917,  c.  233,  par. 
3193jj,  sec.  129;  Hawaii  Acts  1915,  No.  221,  sees.  1,  3;  Idaho  Laws 
1917,  c.  81,  sec.  5;  N.  Y.  Consol.  Laws,  c.  67,  sec.  10;  Tex.  Laws 
1913,  c.  179,  Pt  IV,  sec.  7,  as  amended  by  Laws  1917,  c.  103;  etc. 

»*La.  Sess.  Acts  1914,  No.  20,  sec.  28,  as  amended  by  Sess.  Acts 
1916,  No.  243;  Md.  Acts  1914,  c.  800,  sec.  46,  as  amended  by  Acts 
1916,  c.  597;  Minn.  Gen.  Stat.  1913,  c.  84A,  sec.  8203;  N.  J.  Laws 
1911,  c.  95,  par.  7;  New  Mex.  Laws  1917,  c.  83,  sec.  8;  etc. 


COMPENSATION  LEGISLATION  103 

duct"  is  used  in  Massachusetts ; 3S  and  "willful 
misconduct"  elsewhere.39  Where  injuries  are  due 
to  breach  of  statutory  safety  regulations,  or  neglect 
to  use  guards  or  safety  devices  furnished  by  em- 
ployers, compensation  is  sometimes  denied.40  Del- 
aware refuses  to  extend  the  protection  of  the  law 
to  cases  where  the  accident  was  owing  to  "reckless- 
ness." 41  In  California,  if  the  employee's  injury  is 
caused  by  his  serious  and  willful  misconduct,  the 
compensation  otherwise  recoverable  by  him  is  re- 
duced one-half,  subject  to  certain  restrictions.42 

The  intoxicated  workman  has  few  friends,  as  is 
illustrated  by  provisions  with  regard  to  the  forfeit- 
ure of  his  claims  in  practically  all  of  the  compensa- 
tion states.43  Some  of  the  laws  have  particularized, 
providing  that  only  drunkenness  "while  on  duty" 
shall  prevent  recovery.44  The  provision  in  the 

ss  Mass.  Acts  1911,  c.  751,  Pt.  II,  sec.  2. 

«9  Mich.  Acts  1912  (First  Extra  Session),  Part  II,  sec,  2;  So.  Dak. 
Laws  1917,  c.  376,  sec.  7;  etc. 

*o See,  e.g.,  La.  Sess.  Acts  1914,  No.  20,  sec.  28,  as  amended  by 
Sess.  Acts  1916,  No.  243;  Okla.  Laws  1915,  c.  246,  Art.  II,  sec.  1. 

4i  Del.  Laws  1917,  c.  233,  par.  3193jj,  sec.  129. 

42Cal.  Laws  1917,  c.  586,  sec.  6  (a)    (4). 

43  See,  e.  g.,  Del.  Laws  1917,  c.  233,  par.  3193jj,  sec.  129;  Kan.  Laws 
1911,  c.  218,  sec.  1,  as  amended  by  Laws  1917,  c.  226;  Minn.  Gen. 
Stat.  1913,  c.  84A,  sec.  8203;  New  Mex.  Laws  1917,  c.  83,  sec.  8;  Tex. 
Laws  1913,  c.  179,  Pt.  IV,  sec.  1,  as  amended  by  Laws  1917,  c.  103. 

4* See,  e.g.,  N.  Y.  Consol.  Laws,  c.  67,  sec.  10;  R.  I.  Laws  1912,  c. 
831,  Art.  II,  sec.  2. 


104      WORKMEN'S  COMPENSATION  AND  INSURANCE 

Maine  statute  is  a  curious  one ;  it  makes  intoxication 
"without  the  employer's  knowledge"  a  bar  to  ob- 
taining awards  under  the  act.45  Why  the  knowl- 
edge of  the  employer  should  affect  his  liability  it  is 
difficult  to  understand,  though  his  consent  might 
conceivably  estop  him  from  setting  up  his  work- 
man's intoxication  as  a  defense  to  the  latter's 
claim.46 

The  inconsistency  of  American  compensation 
laws  with  regard  to  the  classes  of  injuries  covered 
leaves  much  to  be  desired.  But  uniformity  in  this 
respect,  though  a  "consummation  devoutly  to  be 
wished,"  is  not  of  the  first  importance.  The  essen- 
tial thing  is  substantial  justice  to  the  parties  con- 
cerned ;  and  it  is  encouraging  to  note  that  the  con- 
ditions of  forfeiture,  though  so  diverse  in  char- 
acter, are  not,  on  the  whole,  unreasonable  or  un- 

45  Me.  Laws  1915,  c.  295,  sec.  8. 

46 " — if  the  employer  knew  or  in  the  exercise  of  ordinary  care 
might  have  known"  that  the  employee  was  intoxicated  or  in  the  habit 
of  becoming  so  while  on  duty,  he  cannot  set  up  the  defense  of  the 
latter's  intoxication,  according  to  the  act.  This  sort  of  estoppel  is  a 
curious  survival  of  the  doctrine  of  negligence  and  comparative  fault; 
though  the  employee  was  in  the  wrong,  the  negligence  of  the  em- 
ployer in  not  informing  himself  of  his  servant's  dissolute  habits, 
gives  the  latter  an  opportunity  to  secure  his  compensation  neverthe- 
less. This  is  out  of  the  spirit  of  modern  compensation  legislation, 
and  also  of  the  provision  for  forfeiture  on  account  of  drunkenness, 
which  should  be  absolute  to  be  effective.  Perhaps  the  Maine  legis- 
lature is  trying  to  discourage  the  employment  of  drinking  men. 


COMPENSATION  LEGISLATION  105 

fair.47  Furthermore,  they  have  been  very  gener- 
ously construed  in  almost  all  jurisdictions.48 

(4)  The  Compulsory  Principle.  Very  few  of 
the  American  compensation  acts  are  compulsory  in 
their  operation  with  regard  to  private  employments. 
Legislators  have  been  afraid  of  raising  the  ghost 
of  the  Ives  case ;  in  part,  too,  they  have  been  guided 
by  a  not  unpraiseworthy  and  very  natural  conserva- 
tism. They  have  felt  that  they  were  forcing  an 
experiment  upon  the  commonwealth,  and  that  timid 
employers  and  skeptical  employees  should  be  per- 
mitted to  withdraw  and  see  how  it  worked  out. 
Nevertheless,  a  conviction  of  the  soundness  of  the 
principle  seems  to  have  taken  hold  on  these  eminent 
gentlemen;  and  they  have  somewhat  inconsistently 
made  it  so  hard  for  the  employer  if  he  does  not  ac- 
cept the  act  that  he  is  virtually  left  with  no  choice  in 
the  matter. 

A  typical  statute  of  this  nature  is  that  in  force  in 
Massachusetts.  According  to  Section  1  of  Part  I, 
employers  who  do  not  accept  the  act  are  deprived  of 
the  defenses  of  contributory  negligence,  negligence 
of  a  fellow-servant  and  assumption  of  risk.  This 

** See  Willard  C.  Fisher  in  Quarterly  Journal  of  Economics,  vol. 
XXX,  p.  42  (November,  1915). 
48  Ibid.,  p.  43. 


106      WORKMEN'S  COMPENSATION  AND  INSURANCE 

provision  was  clearly  intended,  as  one  writer  has 
quaintly  said,  "to  force  employers  to  take  advan- 
tage of"  the  provisions  of  the  act.49  Whatever  may 
be  thought  of  the  insertion  of  such  a  rule  in  '  'elec- 
tive" statutes,  its  popularity  as  a  means  of  gently 
coercing  the  employer  is  attested  by  its  adoption  in 
a  majority  of  the  compensation  states.50  More- 
over, in  New  Jersey,  a  similar  result  is  reached 
where  there  is  no  mutual  assent  of  employer  and 
employee  to  the  compensation  features  of  the  act.51 
A  most  effective  method  of  foisting  compensation 
on  the  parties,  willynilly,  without  tedhnical  "com- 
pulsion," is  the  "presumption  of  acceptance."  This 
ingenious  scheme  was  first  tried  out  in  New  Jersey, 
and  has  had  many  imitators.  It  consists  in  con- 
clusively presuming  that  the  employer  or  employee 
or  both  have  consented  to  be  bound  by  the  provisions 
concerning  compensation  in  the  absence  of  written 
or  other  notice  to  the  contrary.  About  half  of  the 
compensation  states  presume  the  acceptance  of  both 
employer  and  employee  unless  one  or  both  gives  no- 
tice to  the  opposite  effect ;  and  a  considerable  num- 

*»  James  A.  Lowell  in  Massachusetts  Law  Quarterly,  vol.  I,  p.  49 
(February,  1916). 

so  See,  e.  g.t  Del  Laws  1917,  c.  233,  pars.  3193d  (sec.  97),  3193f  (sec. 
99);  Pub.  Acts  Mich.  1912,  No.  10,  Pt.  I,  sees.  1,  2;  etc.,  etc. 

BI  N.  J.  Laws  1911,  c.  95,  pars.  1-3,  5,  8-9;  as  amended  by  Laws 
1913,  c.  174,  and  Laws  1914,  c.  244. 


COMPENSATION  LEGISLATION  107 

her  of  other  jurisdictions,  while  requiring  an  affirm- 
ative act  on  the  part  of  the  employer  to  constitute 
an  election,  presume  that  the  employee  has  accepted 
unless  he  files  notice  to  the  contrary.52 

There  are  a  few  states  which  have  tempted  Provi- 
dence in  the  shape  of  an  indignant  judiciary  by 
passing  compulsory  compensation  or  insurance 
laws.  Such  are  Maryland,  Idaho,  Utah,  Ohio,  and 
a  few  other  progressive  jurisdictions;  the  new 
United  States  compensation  law  is  also  compulsory 
within  its  field.53  Now  that  the  bogey  of  unconsti- 
tutionally is  fast  losing  the  terrors  it  possessed 
in  the  childhood  of  the  compensation  principle,  we 
may  look  for  general  acceptance  of  compulsory 
statutes;  and  the  trend  of  opinion  seems  clearly  in 
that  direction.54 

52  For  typical  statutes  presuming  the  acceptance  by  the  parties, 
see  New  Mex.  Laws  1917,  c.  83,  sec.  4;  Iowa  Code,  1913  Supplement, 
sec.  2577  m   (c-4),  2477  m  2;  etc.     For  statutes  presuming  election 
by   employee  where   employer  has  elected,   see   Cal.   Laws    1917,  c. 
586,  sec.  70  (a),  (b) ;  Tex.  Laws  1913,  c.  179,  Pt.  I,  sec.  3  a  (as  added 
by  Laws  1917,  c.  103). 

53  Md.  Laws  1914,  c.  800,  sees.  14-15 ;  Idaho  Laws  1917,  c.  81,  sec. 
4;  Utah  Laws  1917,  c.  100,  sec.  52  A;  Ohio  Gen.  Code,  sees.  1465- 
1469;  Act  No.  267,  64th  Cong,  (approved  Sept.  7,  1916),  sec.  1. 

54  See  Williams,  Lewis  C.,  in  Case  and  Comment,  vol.  22,  p.  29G 
(September,  1915).    The  elective  type  still  prevails,  however;  about 
two-thirds     of     all     American     compensation     laws     being    elective. 
Rhodes,  Workmen's   Compensation,  page   133.     Mr.   Blanchard   finds 
elective  clauses  which  are  no  more  than  "a  trick  to  evade  the  consti- 
tutional question  .  .  .  subversive  of  good   legislative  practice"   and 


108      WORKMEN'S  COMPENSATION  AND  INSURANCE 

(5)  Nature  of  Awards.  The  introduction  of 
workmen's  compensation  into  this  country  was  too 
hasty  and  precipitate  to  permit  of  the  immediate 
preparation  of  the  necessary  statistical  material  on 
which  to  base  economically  sound  schedules  of 
awards.55  Nor  was  the  experience  of  Europe  of 
much  value  in  this  respect;  for  in  Germany  the  in- 
surance plan  is  backed  by  an  absolute  government, 
so  that  it  cannot  fairly  be  compared  with  the  sys- 
tem which  it  would  be  possible  to  establish  in  our 
states;  and  both  in  Germany  and  other  European 
countries  widespread  confusion  results  from  the 
variety  of  methods  employed  in  publishing  and 
studying  accident  statistics.56  The  consequence  has 
been  a  very  great  and  unscientific  diversity  among 
the  provisions  of  our  state  laws. 

Some  idea  of  the  lack  of  unanimity  among  our 
states  in  this  respect  may  be  gathered  from  a  perusal 
of  the  provisions  of  typical  statutes.  For  total  dis- 
ability, for  instance,  Rhode  Island  employers  must 
pay  their  injured  workmen  50%  of  weekly  wages 

"an  argument  in  favor  of  constitutional  amendment."  Blanchard, 
Liability  and  Compensation  Insurance,  pp.  107-108. 

66  Rubinow,  I.  M.,  in  Quarterly  Publications  of  the  American  Sta- 
tistical Association,  vol.  XIV,  new  series  No.  109,  at  page  358  (March, 
1915). 

6«  Rubinow  (supra),  page  361;  Bradbury,  Workmen's  Compensa- 
tion (2d  ed.),  pages  65-66. 


COMPENSATION  LEGISLATION  109 

for  a  period  of  500  weeks,  if  the  disability  lasts  so 
long;  but  the  weekly  payments  are  subject  to  a 
maximum  of  $10  and  a  minimum  of  $4.57  Where 
total  disability  is  permanent,  California  grants  com- 
pensation at  65%  of  weekly  earnings  for  240  weeks, 
thereafter  at  40%  for  life.58  In  Kansas,  a  work- 
man thus  incapacitated  receives  60%  of  wages  for  a 
maximum  period  of  8  years,  weekly  payments  not 
to  exceed  $15  or  be  less  than  $6.59  Still  other  states 
set  the  percentages  at  55%,  66%%,  etc.;  while  the 
period  during  which  compensation  is  to  be  paid,  and 
the  gross  amounts  which  it  must  not  exceed,  vary 
within  wide  limits. 

A  particularly  vicious  provision  is  that  in  force 
in  a  few  states,  notably  Kansas,  New  Jersey  and 
Texas,  restricting  compensation  in  certain  cases 
of  permanent  partial  disability,  such  as  loss  of  an 
arm,  an  eye,  the  hearing  of  both  ears,  etc.,  in  ac- 
cordance with  a  fixed  schedule.60  Thus,  a  New 
Jersey  employee  who  loses  his  hand,  is  paid  50% 
of  daily  wages  during  150  weeks;  a  Kansas  worker 
who  is  made  completely  deaf,  obtains  50%  of  aver- 

57  R.  I.  Laws  1912,  c.  831,  sees.  10-12. 

58  Cal.  Laws  1917,  c.  586,  sec.  9. 

6»  Kan.  Gen.  Stat.  1915,  sec.  5905,  as  amended  by  Laws  1917,  c.  226. 
eo  Ibid.;  N.  J.  Laws  1911,  c.  95,  sec.  11  (c) ;  Tex.  Laws  1913,  c.  179, 
sees.  11,  12,  as  amended  by  Laws  1917,  c.  103. 


110      WORKMEN'S  COMPENSATION  AND  INSURANCE 

age  weekly  wages  during  100  weeks;  and  so  forth. 
The  absurdity  of  this  crude  method  of  ascertaining 
and  compensating  wage  loss  causes  a  smile;  but  it 
really  presents  a  serious  problem.  It  is  so  easy  to 
dodge  responsibility  for  accurate  computations  by 
bringing  all  classes  of  toilers  within  a  blanket  pro- 
vision, and  the  simplicity  and  comparative  inex- 
pensiveness  in  operation  of  such  a  statute  makes  so 
strong  an  appeal  to  the  economical  mind,  that  there 
is  real  danger  of  the  plan  finding  favor  with  super- 
ficial thinkers.  Reflection,  however,  quickly  dis- 
closes its  faults.  A  very  grave  injustice  results, 
for  example,  when  a  clerk  receives  the  same  com- 
pensation for  the  loss  of  a  left  arm  as  a  carpenter. 
The  former  finds  his  earning  power  only  slightly  im- 
paired ;  the  latter  must  abandon  the  trade  to  which 
he  has  been  trained  and  seek  an  entirely  new  field 
of  endeavor.  Again,  a  musician  and  a  stoker  both 
become  deaf  due  to  accidental  injury  arising  out  of 
and  in  the  course  of  the  employment.  One  sees 
his  entire  means  of  livelihood  swept  away ;  the  other 
may  continue  in  his  occupation. 

Any  graduated  scale  of  awards  must  take  into 
account  the  different  degrees  of  injury — temporary 
partial  disability,  temporary  total  disability,  perma- 


COMPENSATION  LEGISLATION  111 

nent  partial  disability,  permanent  total  disability^ 
and  death.  Where  a  workman  is  slightly  incapaci- 
tated for  a  limited  time,  by  an  accident  of  his  em- 
ployment, enlightened  public  policy  dictates  that  his 
wage  loss  should  be  made  up  to  him  in  part,  great 
care  being  exercised  to  avoid  awards  so  lavish  as  to 
encourage  malingering.  Such  cases,  however,  are 
the  least  pressing,  and  most  of  the  compensation 
acts  are  generous  enough  in  this  regard.  It  is  when 
we  come  to  injuries  which,  while  partial,  are  perma- 
nent, and  total  disability,  either  temporary  or  per- 
manent, that  the  problems  arise.  Wage  loss  here 
is  serious,  and  affects  not  only  the  workman  and 
his  family,  but  the  whole  community,  which  is  at 
the  same  time  deprived  of  his  services  and  in  danger 
of  being  saddled  with  his  support. 

The  search  for  a  common  principle  to  govern 
these  cases  leads  to  the  following  conclusions :  ( 1 ) 
In  death  cases  the  question  of  prime  importance  is 
the  number  of  dependents  of  the  deceased  and  the 
extent  of  their  dependency.  If  there  are  no  de- 
pendents, there  seems  no  social  necessity  for  com- 
pensation other  than  that  needed  to  cover  medical 
treatment  and  burial;  but  where  the  deceased  was 
the  chief  or  sole  support  of  a  family,  it  is  impera- 


112      WORKMEN'S  COMPENSATION  AND  INSURANCE 

tive  both  from  the  point  of  view  of  common  human- 
ity and  that  of  community  interest  that  the  surviv- 
ing dependents  receive  substantial  assistance  during 
the  continuance  of  dependency.60*  (2)  In  all  cases 
of  injury  not  resulting  in  death,  awards  should  be 
so  graduated  as  to  take  into  consideration  both  loss 
of  earning  power  and  the  number  of  dependents 
of  the  person  thus  incapacitated.  Especially  is  this 
true  where  permanent  total  disability  results.  The 
failure  to  apply  this  double  standard  is  one  of  the 
chief  defects  in  American  compensation  legislation, 
most  of  our  statutes  confining  their  consideration 
to  wage  loss  alone.  (3)  The  percentage  of  weekly 
wages  on  which  computations  are  based  should  be 
more  elastic  to  accommodate  itself  to  varying  cir- 
cumstances. Thus,  an  unmarried  employee  tem- 
porarily disabled  might  be  entitled  to  receive  only 
50%  of  weekly  wages,  with  a  proper  minimum, 
while  his  comrade  with  a  large  family  should  be 
granted  75%.  Workmen's  compensation  is  pri- 
marily a  social  problem,  and  uniformity  of  awards 
should  not  be  adhered  to  blindly,  when  such  action 
would  result  in  semi-starvation  in  one  family,  and 
comparative  superfluity  in  another.  For  the  nor- 
mal case,  however,  66%%  of  weekly  wages  may  be 

*o*24  Journal  of  Political  Economy,  pp.  951-952  (December,  1916). 


COMPENSATION  LEGISLATION  113 

said  to  be  a  fair  percentage;  50%  is  too  low,  and 
more  might  encourage  malingering.601* 

The  principles  outlined  above,  however,  have  been 
slow  in  impressing  themselves  on  the  minds  of  our 
legislators.  Only  a  few  states  gauge  the  percent- 
age of  weekly  wages  payable  as  compensation  by 
the  number  of  dependents  of  the  employee; 61  many 
jurisdictions  have  provided  that  in  the  case  of  death 
no  more  than  a  certain  gross  sum  ($3,500  in  Kan- 
sas;62  $4,000  in  Utah; 63  etc.)  shall  be  paid  to  sur- 
viving relatives,  instead  of  making  awards  co-ex- 
tensive with  the  continuance  of  dependency;  and 
the  provisions  limiting  the  maximum  weekly  amount 
which  may  be  disbursed  to  one  injured  workman  un- 
der the  law  (in  some  states  as  low  as  $10)  64  stand 
in  the  way  of  any  liberal  application  of  the  compen- 
sation principle. 

«ob  Blanchard,  Liability  and  Compensation  Insurance,  pp.  127-128. 

61  And  this  only  in  death  cases.    The  New  York  provisions  are 
especially  interesting.    See  N.  Y.  Consol.   Laws,  c.  67,  sec.  16,  as 
amended  by  Laws  1916,  c.  622. 

62  Kan.  Gen.  Stat.  1915,  sec.  5905,  as  amended  by  Laws  1917,  c.  226. 
es  Utah  Laws  1917,  c.  100,  sec.  76. 

**E.  g.,  N.  J.  Laws  1911,  c.  95,  par.  12.  Limitations  of  compensa- 
tion payments  by  a  maximum  weekly  amount  are  unsound  in  prin- 
ciple; and  the  tendency  is  to  remove  them  altogether.  Rhodes,  Work- 
men's Compensation,  p.  147.  The  practice  of  limiting  either  the 
aggregate  amount  of  such  payments  or  the  number  of  weeks  during 
which  payment  should  be  made,  should  be  "condemned  without  re- 
serve." Blanchard,  Liability  and  Compensation  Insurance,  p.  128. 


114      WORKMEN'S  COMPENSATION  AND  INSURANCE 

One  feature  common  to  nearly  all  American  com- 
pensation acts  is  worthy  of  hearty  commendation. 
This  is  the  practice  of  making  awards  in  small 
periodical  payments  instead  of  in  a  lump  sum.  In 
this  the  compensation  system  differs  from,  and  has 
great  practical  advantages  over,  the  common  law; 
for  the  small  periodical  payments  put  less  strain 
on  the  employer  and  his  insurance  carrier,  are  better 
for  the  workmen  in  that  they  offer  less  temptation 
to  squandering  and  furnish  a  modest  but  sufficient 
subsistence  over  an  extended  period,  and  are  to  the 
advantage  of  the  community  in  that  there  is  less 
likelihood  of  their  being  diverted  from  their  pur- 
pose of  obviating  the  social  problem  of  poverty,  to 
investment  and  speculation.  The  rule  is  not  iron- 
bound,  however,  and  most  states  permit  commuta- 
tion of  periodical  payments  to  a  lump  sum  in  cases 
where  under  special  circumstances  this  course  seems 
advisable.65 

(6)  The  Waiting  Period.  Most  of  the  Ameri- 
can compensation  laws  provide  for  an  interval  of 
time  between  the  commencement  of  the  disability 
and  the  beginning  of  payments,  set  variously  at 

«B  E.  g.,  Mass.  Acts  1911,  c.  751,  sec.  22,  as  amended  by  Acts  1914, 
c.  708;  Cal.  Laws  1917,  c.  586,  sec.  28;  Ohio  Acts  1913,  sec.  40,  as 
amended  by  Acts  1917,  House  BUI  506. 


COMPENSATION  LEGISLATION  115 

from  one  to  three  weeks.66  The  purpose  of  such  a 
provision  is  twofold — to  relieve  the  administration 
of  the  act  from  the  burden  and  confusion  of  pay- 
ments for  trifling  injuries,  and  to  lessen  the  tempta- 
tion to  malingering  on  the  part  of  the  employee. 
But  workmen  cannot  see  the  reason  for  the  waiting 
period ; 67  and  where  a  laborer  is  very  poorly  paid 
and  living  from  hand  to  mouth,  it  may  be  a  real  in- 
justice to  make  him  wait  for  his  compensation. 

Waiting  periods  may  be  said  to  be  of  two  kinds : 
those  which  merely  postpone  compensation,  which 
at  the  expiration  of  the  period  (if  the  employee  is 
still  disabled)  is  computed  from  the  date  of  injury; 
and  those  which  constitute  a  real  gap  for  which 
no  compensation  is  recoverable.  The  latter  type 
is  very  objectionable,  to  my  mind;  but  it  is  easily 
the  more  common  in  this  country,  being  found  in  the 
statutes  of  most  of  the  compensation  states.68  The 
other  kind  of  waiting  period,  which  merely  post- 

«eTex.  Laws  1913,  c.  179,  Pt.  I,  sec.  6,  as  amended  by  Laws  1917, 
<:.  103  (one  week) ;  Cal.  Laws  1917,  c.  586,  sec.  9  (b)  (1)  (ten  days) ; 
Iowa  Code,  1913  Supplement,  sec.  2477-m  9  (g),  as  amended  by  Laws 
1917,  c.  270  (two  weeks) ;  New  Mex.  Laws  1917,  c.  83,  sec.  18  (three 
weeks). 

67  American  Labor  Legislation  Review,  voL  V,  at  page  76  (March, 
1915). 

«»E.  g.,  Minn.  Gen.  Stat.  1913,  sec.  8211,  as  amended  by  Laws  1915, 
c.  209,  and  Laws  1917,  c.  302;  New  Mex.  Laws  1917,  c.  83,  sec.  18; 
etc.,  etc. 


116      WORKMEN'S  COMPENSATION  AND  INSURANCE 

pones  awards  for  the  probationary  time  until  the 
injury  is  established  as  serious  enough  to  merit  com- 
pensation, and  which  may  be  defended  as  tending 
to  simplify  the  administration  of  the  acts,  has  been 
established  in  several  states.69  In  Washington, 
Oregon  and  Porto  Rico  there  is  no  waiting  pe- 
riod.70 

The  tendency  as  illustrated  by  recent  legislation 
seems  to  be  towards  adopting  a  standard  waiting 
period  of  one  week,  rather  than  towards  abolishing 
it  altogether.71  On  the  other  hand,  the  New  Mex- 
ico act  of  1917  establishes  a  waiting  period  of 
three  weeks — the  maximum  in  the  United  States.72 
The  author's  feeling  is  that  this  feature  of  com- 
pensation legislation  should  be  done  away  with  en- 

6»  The  form  which  these  statutes  generally  take  is  to  have  a  wait- 
ing period  for  ordinary  injuries,  with  the  proviso  that  if  the  incapac- 
ity extends  for  more  than  a  certain  fixed  period,  compensation  is 
payable  from  the  date  of  injury.  Some  of  the  laws,  with  the  periods 
beyond  which  incapacity  must  extend  to  render  nugatory  the  waiting 
period,  are:  N.  Y.  Laws  1913,  c.  816,  sec.  12,  as  amended  by  Laws 
1917,  c.  705  (49  days);  So.  Dak.  Laws  1917,  c.  376,  sec.  24  b  (8 
weeks);  Mich.  Pub.  Acts,  First  Extra  Session,  1912,  No.  10,  Pt.  II, 
sec.  3  (8  weeks) ;  R.  I.  Laws  1912,  c.  831,  Art.  II,  sec.  4,  as  amended 
by  Laws  1917,  c.  1534  (4  weeks). 

'o  Remington  and  Ballinger's  Ann.  Codes  and  Stats.  Wash.,  sees. 
6604-^5  d  (but  no  compensation  is  payable  unless  loss  of  earning 
power  exceeds  5%) ;  Oregon  Laws  1913,  c.  112  (as  amended  by  Laws 
1915,  c.  271),  sec.  21  b,  c,  d;  Porto  Rico  Acts  1916,  No.  19. 

71  This  is  the  conclusion  reached  by  Dr.  Rubinow  in  an  article  in 
26  Journal  of  PoL  Economy,  p.  273  (March,  1918). 

72  New  Mex.  Laws  1917,  c.  83,  sec.  18. 


COMPENSATION  LEGISLATION  117 

tirely,  or,  if  retained,  should  be  set  at  three  days  or 
some  similarly  low  mark.73 

(7)  Medical  and  Surgical  Aid.  Compensation 
awards  are  intended  to  take  the  place  in  some  de- 
gree of  wages,  and  to  defray  the  ordinary  expenses 
of  the  injured  workman  and  his  family  during  the 
enforced  hiatus  in  his  productive  activity.  It  is 
obvious,  however,  that  this  fails  entirely  to  cover 
one  class  of  very  necessary  expenditures — the  medi- 
cal and  surgical  treatment,  the  hospital  charges, 
and  the  countless  incidental  calls  on  the  purse,  which 
the  injury  entails.  To  very  poor  workmen,  and 
families  living  on  a  margin,  "doctors'  bills"  come  as 
a  crushing  blow,  and  the  utter  impossibility  of  pay- 
ing them  out  of  the  pittance  reserved  for  the  abso- 
lute essentials  of  every-day  life,  is  manifest.  Espe- 
cially is  this  true  in  states  where  "waiting  periods" 
immediately  follow  the  injury,  and  no  compensa- 
tion is  forthcoming  at  the  very  time  when  the  in- 
jured man  most  needs  the  costly  attention  and  care 
of  a  physician.  The  neglect  and  consequent  en- 
dangering of  life  and  retarding  of  recovery  which 
would  be  the  inevitable  outcome  if  no  special  pro- 
vision were  made  for  these  cases,  present  a  serious 

73  The  waiting  period  under  the  Federal  compensation  law  is  3 
days.  Act  No.  267,  64th  Cong.  (1915-1916),  sec.  2.  Four  days  is  the 
length  advocated  by  a  recent  writer.  McCanna,  The  New  Era,  p.  102. 


118      WORKMEN'S  COMPENSATION  AND  INSURANCE 

social  problem ;  for  anything  that  tends  to  prolong 
the  laborer's  period  of  enforced  idleness  causes  an 
additional  drain  on  the  resources  of  the  commun- 
ity. To  meet  this  condition,  nearly  all  compensa- 
tion states  have  made  some  provision  for  medical 
and  surgical  aid  for  an  injured  employee.74 

In  most  jurisdictions,  "reasonable"  medical  and 
surgical  aid,  including  hospital  treatment,  the  serv- 
ices of  nurses,  and  such  crutches,  apparatus,  and 
medical  and  surgical  supplies  as  may  be  necessary, 
are  required  to  be  furnished  by  the  employer  or 
responsible  insurance  carrier.  In  almost  all  states, 
however,  this  generous  scheme  is  subject  to  limita- 
tions, both  as  to  time  and  amount.  In  Delaware 
only  $25  may  be  spent  for  this  purpose,  and  treat- 
ment must  not  extend  over  a  period  greater  than 
two  weeks.75  New  Jersey  is  scarcely  more  gener- 
ous, having  the  same  restriction  as  to  time,  and  a 
maximum  disbursement  of  $50.76  South  Dakota 

^*E.g.,  Iowa  Code  (1913  Supplement),  sec.  2477-m  9  (b),  as 
amended  by  Laws  1917,  c.  270;  Del.  Laws  1917,  c.  233,  sec.  101;  Utah 
Laws  1917,  c.  100,  sec.  86;  Kan.  Gen.  Stat.  1915,  sec.  5905,  as 
amended  by  Laws  1917,  c.  226;  Vt.  Laws  1915,  c.  164,  sec.  14,  as 
amended  by  Laws  1917,  c.  173.  There  is  no  provision  for  medical  or 
surgical  aid  in  Arizona,  Washington,  or  Wyoming.  Blanohard,  Lia- 
bility and  Compensation  Insurance,  p.  126. 

76  Del.  Laws  1917,  c.  233. 

f«N.  J.  Laws  1911,  c.  95,  par.  14,  as  amended  by  Laws  1913,  c. 
174,  and  Laws  1914,  c.  244. 


COMPENSATION  LEGISLATION  119 

and  Iowa  set  a  maximum  of  four  weeks  and  $100 ; 7T 
Kansas,  50  days  and  $150  ;78  Utah  has  no  time 
limitation  and  permits  as  much  as  $200  to  be  spent 
for  this  purpose.79  Texas  has  wisely  set  no  limit 
on  the  amount  which  may  be  expended,  and  while 
providing  that  in  general  the  injured  workman  shall 
not  be  reimbursed  for  more  than  two  weeks  of  treat- 
ment, allows  some  latitude  where  total  disability  re- 
sults.80 California  and  Idaho  are  even  more  lib- 
eral, and,  recognizing  that  each  case  must  be  de- 
cided on  its  own  merits  and  in  the  light  of  its 
peculiar  circumstances,  provide  for  such  treatment 
as  is  reasonably  required  for  a  reasonable  time,  with 
no  further  restrictions.81 

"One  of  the  objects  of  compensation  is  the  con- 
servation of  human  resources,"  remarks  a  recent 
writer;82  and  if  this  is  conceded  (as  it  must  be) 
adequate  provision  for  medical  and  surgical  aid  will 
be  seen  to  be  a  very  essential  part  of  the  great  social 
scheme  of  which  this  modern  legislation  is  the  ex- 

7T  So.  Dak.  Laws  1917,  c.  376,  sec.  24  a;  Iowa  Code  (1913  Supple- 
ment), sec.  2477-m  9  (b),  as  amended  by  Laws  1917,  c.  270. 

78  Kan.  Gen.  Stat.  1915,  sec.  5905,  as  amended  by  Laws  1917,  c.  226. 

"  Utah  Laws  1917,  c.  100. 

80  Tex.  Laws  1913,  c.  179,  sees.  7a,  7b,  12e,  12f,  as  amended  by  Laws 
1917,  c.  103. 

*i  Cal  Laws  1917,  c.  586,  sees.  9  a,  10;  Idaho  Laws  1917,  c.  81,  sees. 
16-17. 

s*  Rhodes,  Workmen's  Compensation,  page  144. 


120      WORKMEN'S  COMPENSATION  AND  INSURANCE 

pression.  It  is  of  the  first  importance  that  every 
injured  employee  should  receive  immediate  and  ef- 
ficient care;  for  if  he  does  not,  the  community,  the 
taxpayer,  the  consumer,  in  the  end  pay  more,  and 
the  world  is  poorer  by  the  labor  which  the  unfortu- 
nate victim  might  have  been  enabled  to  resume. 
To  the  law-makers,  therefore,  we  recommend  the 
passage  of  the  broadest  sort  of  statutes,  vesting 
authority  in  proper  bodies  to  determine  the  reason- 
able expenditure  necessary  to  bring  the  injured 
workman  back  to  the  highest  possible  efficiency,  and 
to  decree  the  payment  of  the  same.  Stingy  allow- 
ances represent  a  penny-wise,  pound-foolish  policy, 
as  indefensible  on  economic  grounds  as  it  is  from 
the  humanitarian  standpoint. 

Another  question  of  importance  in  this  connec- 
tion is  whether  the  selection  of  a  physician  should  be 
left  with  the  employer,  the  employee,  or  some  other 
agency.  A  recent  writer  has  urged  with  some  elo- 
quence that  the  employee  should  exercise  the  choice 
in  this  matter,  since  his  confidence  in  his  physician 
may  be  an  important  element  in  hastening  his  recov- 
ery; though  this  same  author  concedes  that  the  ju- 
dicial tendency,  in  the  absence  of  express  provision 
in  the  statutes,  has  been  to  leave  with  the  employer 
the  discretion  in  selecting  the  medical  attendant, 


COMPENSATION  LEGISLATION  121 

subject  to  the  limitation  of  reasonableness.82"  Both 
plans  have  disadvantages.  Where  an  impartial 
commission  administers  the  statute,  it  would  seem 
that  that  body  might  well  be  empowered  to  decide 
in  this  matter  as  in  others. 

(8)  Methods  of  Administration.  The  difficult 
problem  of  securing  a  competent  body  to  administer 
the  compensation  laws  has  been  met  by  the  states  in 
various  ways.  In  New  Jersey,  the  local  Court  of 
Common  Pleas  hears  and  determines  disputes  aris- 
ing under  the  act;  from  its  decision  there  is  an  ap- 
peal to  the  state  Supreme  Court,  but  only  on  ques- 
tions of  law.83  This  system  has  been  severely  criti- 
cized, and  the  adaptability  of  the  law  courts  to  such 
purposes  questioned.  In  most  states,  such  matters 
as  are  susceptible  of  agreement  or  arbitration  will 
be  composed,  if  possible,  in  that  manner;  but  if  co- 
operative means  fail,  a  hearing  before  the  state  In- 
dustrial Commission  or  similar  body  is  resorted  to. 
The  right  to  appeal  to  the  highest  court  of  the  state 
is  commonly  granted. 

As  litigation,  with  its  inevitable  delays  and  com- 
plications, was  one  of  the  chief  and  recognized  de- 
fects of  the  common  law  system,  one  would  natu- 

ezaMcCanna,  The  New  Era,  pp.  86-87. 

ss  N.  J.  Laws  1911,  c.  95,  pars.  18,  20,  as  amended  by  Laws  1916, 
c.  54. 


122      WORKMEN'S  COMPENSATION  AND  INSURANCE 

rally  expect  to  find  legislators  anxious  to  take  com- 
pensation cases  out  of  the  courts ;  and  the  failure  to 
do  so  in  several  states  is  a  disappointing  feature. 
However,  as  has  been  pointed  out  by  a  recent 
writer,84  laws  which  leave  the  settlement  of  compen- 
sation suits  to  the  courts  generally  endeavor  to  elim- 
inate delay  by  providing  that  cases  be  decided 
summarily  and  with  the  least  possible  indulgence  in 
legal  technicalities.  For  example,  in  Minnesota 
disputed  claims  may  be  submitted  by  either  party 
to  a  judge  of  the  District  Court,  who  hears  the 
case  and  settles  it  in  a  summary  manner,  appeal 
from  such  judgment  to  the  Supreme  Court  being 
permitted  on  questions  of  law  only.85  In  New  Jer- 
sey, if  no  agreement  is  filed  within  21  days,  the 
facts  with  regard  to  the  claim  are  certified  by  the 
Workmen's  Compensation  Aid  Bureau  to  the 
Judge  of  the  Court  of  Common  Pleas,  who  decides 
both  law  and  facts;  his  decision  is  subject  to  re- 
view on  questions  of  law  by  the  Supreme  Court.88 
New  Mexico,  however,  utilizes  the  judicial  machin- 
ery just  as  in  ordinary  civil  cases,  trial  being  had, 
on  filing  the  claim,  before  the  District  Court,  in  case 

s*  Rhodes,  Workmen's  Compensation,  p.  181. 

SB  Minn.  Gen.   Slat.  1913,  sees.  8216,  8219,  8225,  as  amended  by 
Laws  1915,  c.  209. 

8«See  footnote  83,  tupra. 


COMPENSATION  LEGISLATION  123 

of  non-payment  of  any  claim  of  which  notice  has 
been  given  to  the  employer,  either  party  being  en- 
titled to  demand  a  jury  trial,  and  the  final  order 
being  reviewable  by  the  Supreme  Court  upon  ap- 
peal or  writ  of  error  in  the  same  manner  as  other 


cases.87 


The  court  system  of  administration  has  one  dis- 
advantage which  is  fatal  to  its  efficiency.  It  thrusts 
upon  judges  who  are  selected,  and  rightly  selected, 
mainly  because  of  their  expert  knowledge  of  the 
law,  the  practical  working  out  of  a  system  which 
involves  few  legal  principles  but  requires  for  its 
proper  handling  a  close  familiarity  with  the  indus- 
trial field  and  problems  of  labor.  A  magistrate 
who  copes  with  the  interpretation  of  contracts,  the 
title  to  realty,  the  law  of  assault,  every  day,  has 
neither  time  nor  inclination  to  master  the  question 
of  how  far  a  glass-blower  is  disabled  for  profitable 
employment  by  the  loss  of  his  hearing,  or  what  de- 
gree of  dependency  will  justify  the  minimum  award 
to  dependents,  especially  when  the  compensation 
cases  on  the  court  docket  are  relatively  few.  An 
Industrial  Accident  Commissioner,  or  a  special 
Board  or  other  tribunal,  endowed  with  special 
knowledge  and  devoting  its  entire  time  to  compen- 

ST  New  Mex.  Laws  1917,  c.  83,  sees.  13,  15,  24. 


124      WORKMEN'S  COMPENSATION  AND  INSURANCE 

sation  work,  would  be  immeasurably  more  efficient. 
This  conclusion  has  evidently  been  pretty  generally 
attained,  as  most  states  have  provided  for  adminis- 
tration by  such  an  individual  or  body.88 

Some  of  the  typical  statutory  provisions  may 
profitably  be  reviewed  here.  In  Massachusetts, 
employer  and  employed  may  settle  the  claim  by 
agreement,  subject  to  the  approval  of  the  Indus- 
trial Accident  Board ;  in  case  of  dispute  either  party 
may  notify  the  Board,  which  must  assign  the  case 
for  hearing  by  a  member  thereof;  and  an  appeal 
from  the  Board's  order  or  decision  may  be  taken 
within  ten  days  after  notice  of  filing.89  In  Iowa, 
the  Industrial  Commissioner  may  pass  on  agree- 
ments; or  an  arbitration  committee  appointed  by 
the  parties  and  the  Commissioner  may  decide  the 

88  E.  g.,  Mass.  Acts  1911,  c.  751,  Pt.  Ill,  as  amended  by  Acts  1912, 
c.  571,  Acts  1913,  c.  48,  448,  746,  Acts  1914,  c.  708,  Acts  1915,  c. 
132,  275,  Acts  1916,  c.  72,  Acts  1917,  c.  297  (Industrial  Accident 
Board);  Cal.  Laws  1917,  c.  586,  sec.  3  (1),  also  Laws  1913,  c.  176, 
sees.  3-11  (Industrial  Accident  Commission);  R.  I.  Laws  1912,  c. 
831,  Art.  VI,  sec.  6,  as  added  by  Laws  1915,  c.  1268  (commissioner 
of  industrial  statistics);  Kan.  Gen.  Stat.  1915,  sees.  5933-5937  (su- 
perintendent of  insurance) ;  Porto  Rico  Acts  1916,  No.  19,  sec.  10,  as 
amended  by  1917  act  approved  April  12,  1917  (Workmen's  Relief 
Commission).  For  arguments  in  favor  of  administration  by  a  com- 
mission or  industrial  accident  board,  see  Blanchard,  Liability  and 
Compensation  Insurance,  pp.  136-137;  McCanna,  The  New  Era, 
p.  102. 

so  See  sees.  4-11  of  Pt.  Ill  of  Mass,  act,  as  cited  in  footnote  88,, 
supra;  also  Mass.  Acts  1915,  c.  132. 


COMPENSATION  LEGISLATION  125 

claim,  subject  to  review  by  the  Commissioner,  from 
whose  determination  appeals  on  certain  specified 
grounds  only  are  allowed.90  In  Utah,  the  Indus- 
trial Commission  has  full  power  to  hear  and  deter- 
mine all  questions  pertaining  to  payment  of  com- 
pensation; if  it  denies  a  claim  on  a  ground  going 
to  the  basis  of  the  claimant's  right,  appeal  may  be 
taken  in  30  days  to  the  District  Court  with  privilege 
of  jury  trial;  and  a  further  appeal  to  the  Supreme 
Court  is  provided  for.91  Idaho  encourages  settle- 
ment by  agreement,  subject  to  approval  by  the  In- 
dustrial Accident  Board;  in  case  of  dispute,  either 
party  may  apply  for  appointment  of  an  arbitra- 
tion committee  to  be  composed  of  three  members 
representing  both  parties  and  the  Board,  whose  de- 
cision is  subject  to  review  by  the  full  Board  upon 
application  for  such  within  30  days,  or  in  case  no 
award  is  made  within  30  days;  and  from  thence 
appeal  is  to  the  District  Court  on  questions  of  law 
only.92 

It  is  probably  not  desirable  that  every  compen- 
sation case  should  come  up  for  a  full  hearing,  even 
before  a  board  or  commission  specially  trained  and 

»o  Iowa  Code  (1913  Supplement),  sees.  2477-m  25-33,  as  amended 
by  Laws  1917,  c.  270. 

si  Utah  Laws  1917,  c.  100,  sec.  87. 

92  Idaho  Laws  1917,  c.  81,  sees.  49-^55,  57,  60. 


126      WORKMENTS  COMPENSATION  AND  INSURANCE 

dedicated  to  that  sort  of  work.  Such  a  proceeding 
partakes  too  strongly  of  the  nature  of  a  court  trial, 
with  its  cumbrous  machinery  and  inevitable  delay. 
Where  an  agreement  can  be  reached  between  the 
claimant  and  the  employer,  affidavits  reciting  that 
fact,  and  the  circumstances  of  the  accident,  extent 
of  the  injury,  etc.,  should  be  sent  up  to  the  admin- 
istrative board  for  approval;  if  satisfactory  and 
strictly  in  accordance  with  law,  the  settlement  out 
of  court  should  be  approved,  and  the  incident  ended. 
If  ground  for  reversal  appears  on  the  face  of  the 
case,  a  hearing  should  be  ordered  and  the  question 
tried  in  a  summary  manner  by  the  board,  just  as 
if  a  dispute  were  involved;  for  it  is  essential  to  the 
proper  operation  of  workmen's  compensation  laws 
that  employees  be  not  permitted  to  sign  away  their 
legal  rights  thereunder,  no  matter  how  willing  they 
may  be  to  do  so. 

The  ideal  law  would  also  provide  for  an  appeal 
to  the  highest  or  intermediate  court  of  the  state; 
but  the  policy  adopted  in  many  jurisdictions  of  con- 
sidering the  findings  of  fact  of  the  administrative 
board  final,  and  confining  appeals  to  questions  of 
law,  seems  eminently  sound. 

(9)  Extraterritorial  Effect.  One  of  the  minor 
problems,  but  a  very  practical  one,  with  which  those 


COMPENSATION  LEGISLATION  12T 

charged  with  the  administration  of  compensation 
laws  have  to  deal,  is  that  of  extraterritorial  effect. 

A  typical  case  is  this:  the  X Company,  in 

New  Jersey,  employs  B ,  a  salesman,  to  can- 
vass that  state  and  certain  towns  in  Pennsylvania. 
The  salesman  sustains  an  injury  arising  out  of  and 
in  the  course  of  his  employment  in  Pennsylvania. 
Under  what  law,  if  any,  is  he  entitled  to  compensa- 
tion? 

The  answer  to  this  problem  is  that  B would 

be  compensated  according  to  the  law  of  New  Jer- 
sey; for  the  contract  of  hiring  was  made  there,  and 
New  Jersey  is  one  of  the  jurisdictions  applying  the 
lex  loci  contractus,  or  law  of  the  place  where  the 
contract  was  made,  in  such  cases.93  Pennsylvania 
has  no  jurisdiction  of  the  employer  or  of  the  con- 
tract of  employment  in  the  supposititious  case,  but 
the  injury  was  incurred  within  its  boundaries;  so  it 
is  conceivable  that  if  the  claim  was  originally  made 
under  the  Pennsylvania  act,  compensation  might  be 
granted  in  that  state,  although  a  prior  recovery  of 
compensation  in  New  Jersey  would  operate  as  a 
bar.94 

A  great  many  compensation  laws  have  no  provi- 

»3  Rounsaville  v.  Central  R.  Co.  (1915),  87  N.  J.  Law  371. 
Harvard  Law  Review,  pp.  620-628  (February,  1918). 


138      WORKMEN'S  COMPENSATION  AND  INSURANCE 

sion  at  all  for  extraterritorial  effect.95  In  the  ab- 
sence of  such  the  courts  sometimes  give  full  force 
and  operation  to  the  acts  (in  proper  cases)  outside 
the  state  of  origin,  as  has  been  done  by  the  highest 
tribunal  in  New  York.98  Where  the  legislature  has 
undertaken  to  regulate  the  matter,  it  is  generally 
provided  that  compensation  may  be  had  when  the 
employee  was  hired  in  the  state,  even  if  the  injury 
occurred  beyond  its  boundaries.97 

Extraterritorial  effect  does  not  present  a  prob- 
lem of  very  great  moment.  It  is  important,  of 
course,  that  some  sure  method  of  procuring  com- 
pensation be  provided  in  cases  of  possible  conflict  of 
jurisdiction;  but  as  a  practical  matter  judicial  con- 
struction, in  the  absence  of  enabling  legislation,  has 
generally  secured  the  plaintiff's  rights.  Double 
recoveries  are  rendered  impossible  by  the  holding  of 
the  courts  that  when  an  injured  employee  accepts 
compensation  under  the  law  of  the  state  where  the 
contract  was  made,  he  automatically  waives  any 

»5  Rhodes,  Workmen's  Compensation,  page  151. 

•«  Valentine  v.  Smith,  168  App.  Div.  403,  affirmed  in  216  N.  Y.  763. 

»7 E.g.,  Idaho  Laws  1917,  c.  81,  sec.  62;  Utah  Laws  1917,  c.  100, 
sec.  65;  Texas  Laws  1913,  c.  179,  Pt.  I,  sec.  19,  as  added  by  Laws 
1917,  c.  103;  Nev.  Laws  1913,  c.  Ill,  sec.  41,  as  amended  by  Laws 
1915,  c.  190.  But  the  Pennsylvania  act  does  not  apply  to  any  acci- 
dent occurring  outside  of  the  Commonwealth,  irrespective  of  the  place 
where  the  contract  of  hiring  was  made.  Pa.  Laws  1915,  Act  No.  338, 
sec.  1. 


COMPENSATION  LEGISLATION  129 

other  rights  against  his  employer.98  For  the  rare 
case  where  suit  is  brought  to  enforce  the  compensa- 
tion law  of  another  state  with  regard  to  injuries 
received  in  the  latter  jurisdiction,  provision  is  sel- 
dom made,  though  Idaho  permits  recovery  in  such 
cases  when  the  claimant's  rights  can  reasonably  be 
determined  and  dealt  with  by  the  local  Board  and 
Courts."  In  almost  all  such  cases,  however,  the 
more  normal  procedure  of  seeking  justice  in  the 
state  of  hiring  is  feasible  and  should  be  encouraged. 
(10)  Accident  Prevention.  It  is  true  that  the 
theory  of  workmen's  compensation  rests  on  the  as- 
sumption that  the  expense  of  industrial  accidents  is 
part  of  the  cost  of  the  product;  but  it  is  a  mistake 
to  presume  that  passive  acceptance  of  conditions  is 
therefore  included  in  the  compensation  program. 
Indeed,  the  opposite  is  the  fact.  So  far  from  tak- 
ing the  great  number  of  accidents  in  modern  in- 
dustry for  granted,  well-considered  compensation 
laws  make  either  direct  provision  for  accident  pre- 
vention through  the  rule-making  power  given  to  ad- 

»» Rhodes,  Workmen's  Compensation,  page  152.  But  where  one 
state  is  under  the  old  employers'  liability  system,  and  the  other  has  a 
compensation  act,  and  where  compulsory  acts  are  involved,  the  law  as 
to  double  recoveries  is  by  no  means  as  simple  and  equitable  as  Mr. 
Rhodes  intimates.  31  Harvard  Law  Review  619-636  (February, 
1918). 

*»  Idaho  Laws  1917,  c.  81,  sec,  62. 


130      WORKMEN'S  COMPENSATION  AND  INSURANCE 

ministrative  boards,  or  indirectly  encourage  the  use 
of  safety  appliances.  The  very  fact  of  compensa- 
tion itself  is  an  encouragement  to  accident  preven- 
tion ;  for  when  employers  are  forced  to  assume  the 
financial  burden  of  the  injuries  springing  from  the 
accidents  of  industry,  their  enthusiasm  for  the 
elimination  of  such  injuries  is  naturally  increased. 
A  few  instances  of  explicit  statutory  provisions 
regarding  accident  prevention,  taken  at  random 
from  the  mass  of  compensation  laws,  will  serve  to 
illustrate  the  methods  employed  to  stimulate  inter- 
est in  the  humanitarian  side  of  this  labor  problem. 
In  Delaware  the  Industrial  Accident  Board  is 
charged  with  the  duty  of  inquiring  into  causes  and 
results  of  industrial  accidents,  and  studying  the 
most  advanced  methods  of  safeguarding  against 
them.100  In  California,  the  employer  must  do 
everything  reasonably  necessary  to  protect  life  and 
the  safety  of  employees;  and  the  Industrial  Acci- 
dent Commission  is  empowered  to  prescribe  rules, 
establish  standards,  require  use  of  safeguards,  etc., 
for  accident  prevention,  and  impose  penalties  to 
enforce  the  same.101  Massachusetts  compels  the 
Directors  of  the  Employees'  Insurance  Association 

100  Del.  Laws  1917,  c.  233,  sec.  116. 

101  CaL  Laws  1917,  c.  586,  sees.  34r-35,  also  Laws  1913,  c.  177,  sec.  18. 


COMPENSATION  LEGISLATION  131 

to  make  and  enforce  reasonable  regulations  for  the 
prevention  of  accidents  on  the  premises  of  subscrib- 
ers ;  and  gives  to  the  State  Board  of  Labor  and  the 
Industrial  Accident  Board  jointly,  the  right  to 
adopt  and  enforce  regulations  for  prevention  both 
of  accidents  and  industrial  diseases.102 

Statistics  available  from  several  compensation 
states  show  that  about  25%  of  industrial  accidents 
are  due  to  mechanical  causes;  and  it  has  also  been 
established  that  the  severity  of  accidents  mechan- 
ical in  their  origin  is  much  greater  than  the  severity 
of  those  due  to  the  thoughtlessness  and  negligence 
of  the  worker.103  The  fresh  impetus  given  to  acci- 
dent prevention  by  the  introduction  of  workmen's 
compensation  resulted  in  a  marked  reduction  of 
non-mechanical  accidents,  due  to  safety  organiza- 
tion and  educational  methods.  A  great  deal,  how- 
ever, remains  to  be  done  in  the  shape  of  "mechan- 
ical safeguarding" ;  and  proper  attention  to  the  de- 
sign and  location  of  buildings,  the  arrangement  of 
transportation  facilities,  the  means  of  access  to 
safety  points,  proper  lighting,  and  the  guarding 
and  replacement  of  dangerous  machines,  will  con- 

102  Mass.  Acts  1911,  c.  751,  Pt.  IV,  sec.  18,  also  Laws  1913,  c.  813. 

103  Monthly  Review  of  U.  S.  Bureau  of  Labor  Statistics,  vol.  V, 
p.  112  (October,  1917). 


132      WORKMEN'S  COMPENSATION  AND  INSURANCE 

tribute  greatly  towards  the  elimination  of  purely 
mechanical  hazards.104 

One  of  the  most  obvious  methods  of  inducing 
an  employer  to  bestir  himself  in  accident  preven- 
tion— raising  his  insurance  rates  when  he  shows  a 
reluctance  to  employ  safety  devices — has  been 
availed  of  surprisingly  little  in  American  compen- 
sation systems.  Private  insurance  companies 
have  achieved  wonderful  results  by  this  simple 
means;  yet  in  statute  after  statute  legislators  have 
clung  to  a  rigid  classification  of  rates  according 
to  industries,  and  have  assessed  the  employer  who 
lavishes  time  and  money  on  safety  appliances  on 
the  same  basis  as  the  one  who  grudges  the  irreduci- 
ble minimum  of  effort  along  that  line.105 

It  is  true  that  the  problem  of  finding  an  agency 
to  which  could  be  left  with  safety  the  delicate  task 
of  altering  the  standard  rate  of  insurance  in  accord- 
ance with  the  insured's  efforts  along  the  line  of  acci- 
dent prevention,  is  a  perplexing  one.  Private  in- 

104  Ibid.,  p.    113   . 

IOB  Washington  appeals  to  the  pocket  of  the  employer  in  a  very- 
practical  way  by  providing  that  if  he  does  not  obey  a  statute  or  order 
of  the  commission  as  to  safety  devices  or  regulations,  he  is  subject  to- 
a  penalty  of  50%  of  the  compensation  awarded,  this  amount  to  be 
paid  into  the  accident  fund.  If  the  injured  employee  is  responsible 
for  the  removal  of  a  safeguard  his  compensation  is  reduced  by  10%. 
Blanchard,  Liability  and  Compensation  Insurance,  p.  139. 


COMPENSATION  LEGISLATION  1SS 

surance  adjusters  and  actuaries,  however,  exercise 
these  functions  to-day  with  distinct  success;  and  it 
seems  not  unreasonable  to  suppose  that  a  State 
Insurance  Commissioner  or  Industrial  Accident 
Board  could  be  intrusted  with  this  difficult  work 
without  much  risk  of  unfair  discrimination,  and 
with  a  salutary  effect  on  dangerous  industrial  con- 
ditions. 


CHAPTER  V 

INSURANCE  FEATURES 

THE  success  of  any  system  of  workmen's  compensa- 
tion must  rest,  in  the  last  analysis,  on  insurance.1 
The  individual  employer  cannot  afford  to  take  the 
risk  of  being  suddenly  called  on  to  pay  large  sums 
in  the  form  of  awards  to  injured  workmen;  such  a 
demand,  caused  by  an  accident  in  which  many  are 
injured,  and  coming  at  a  time  when  ready  money  is 
scarce,  might  conceivably  bankrupt  even  a  large 
concern.  A  somewhat  similar  situation  existed, 
to  be  sure,  in  the  days  of  common  law  employers' 
liability;  but  several  factors  tended  then  to  make 
the  need  of  insurance  less  pressing.  For  one  thing, 
the  question  of  liability  was  tried  in  a  court  of  law, 
and  the  employer,  better  able  to  pay  for  expert 
legal  advice  than  his  opponent,  and  armed  with  his 
special  defenses — assumption  of  risk,  contribute^ 
negligence,  and  fellow-servant  rule — was  often  able 

i  See  note  by  the  present  author  on  "State  Insurance  under  Work- 
men's Compensation  Acts"  in  17  Columbia  Law  Review,  pp.  75-78 
(January,  1917) ;  also  Blanchard,  Liability  and  Compensation  Insur- 
«nce,  p.  207;  and  9  Maine  Law  Review,  p.  199  (May,  1916). 

134 


INSURANCE  FEATURES  135 

to  evade  responsibility  entirely.  Moreover,  dam- 
ages, when  awarded,  being  dependent  on  the  whims 
of  a  jury,  were  such  an  uncertain  quantity  as  to 
render  insurance  against  them  highly  speculative, 
with  the  result  that  premiums  were  often  prohibi- 
tive. 

Workmen's  compensation  laws  have  greatly  re- 
duced the  legal  uncertainties  inherent  in  the  old  sys- 
tem, and  have  left  only  the  normal  risk — that  of 
the  occurrence  of  the  injury  itself — for  insurers 
to  contend  with.  The  shrewd  employer  of  to-day, 
forced,  as  he  is,  to  pay  compensation  practically 
without  regard  to  the  question  of  negligence,  faces 
a  problem  somewhat  like  this:  "My  factory  em- 
ploys so  many  hands;  even  with  the  utmost  care, 
explosions  and  other  accidents  may  occur,  and  may 
injure  a  great  number  of  my  men.  Under  such 
circumstances,  the  most  conclusive  proof  that  I  have 
been  blameless  will  avail  me  not  at  all,  and  I  will 
be  forced  to  pay  compensation  according  to  a  defi- 
nite schedule  to  all  my  injured  employees.  Shall  I 
take  my  chances,  carry  my  own  risk,  or  insure  else- 
where?" It  is  safe  to  say  that  nine  out  of  ten  such 
employers  would  be  in  the  market  for  insurance 
almost  before  they  had  finished  formulating  the 
above  proposition. 


136      WORKMEN'S  COMPENSATION  AND  INSURANCE 

Heretofore  we  have  assumed  that  it  is  optional 
with  employers  whether  they  shall  insure  or  merely 
stand  ready  to  pay  compensation  when  the  acci- 
dent occurs.  But  in  a  large  and  increasing  number 
of  jurisdictions,  this  option  no  longer  remains. 
The  requirements  vary:  thus,  in  New  York,  Utah, 
Maryland,  Texas,  and  a  number  of  other  states, 
the  employer  is  at  liberty  to  choose  between  insur- 
ance in  stock  companies,  mutual  associations,  or  a 
state-managed  fund  or  central  association;  and 
furthermore,  in  the  three  first-mentioned  states 
sufficient  proof  of  financial  responsibility  will  be 
accepted  in  lieu  of  any  of  these.2  In  other  juris- 
dictions, there  is  monopolistic  or  semi-monopolistic 
state  insurance ;  while  still  others  maintain  no  state 
fund  at  all,  but  demand  insurance  by  the  employer 
nevertheless.8 

The  danger  of  a  workmen's  compensation  act 
with  no  provision  whatsoever  for  insurance  or  secur- 
ity has  already  been  indicated.  Sudden  large  de- 
mands on  the  employer  may  ruin  him;  and  as  the 
workman's  claim  under  such  an  act  is  a  personal 

2N.  Y.  ConsoL  Laws,  c.  67,  sec.  50;  Utah  Laws  1917,  c.  100,  sec. 
53;  Md.  Laws  1914,  c.  800,  sees.  14-15;  Tex.  Laws  1913,  c.  179,  Part 
III,  Part  IV,  sec.  2,  as  amended  by  Tex.  Laws  1917,  c.  103. 

s  See  texts  of  laws,  also  Digests  published  by  Workmen's  Com- 
pensation Publicity  Bureau. 


INSURANCE  FEATURES  137 

one  against  the  employer,  it  follows  that  the  lat- 
ter's  financial  collapse  spells  disaster  for  the  injured 
man  as  well.  Moreover,  a  state  of  affairs  which  of- 
fers such  a  temptation  to  speculation  by  employers 
on  the  probability  of  accidents  is  not  conducive  to 
the  financial  stability  of  the  industrial  world.  The 
following  statement  by  a  leading  English  writer 
explains  this  and  other  weaknesses  of  the  English 
or  "straight  compensation"  system: 

"British  law  now  recognizes,  for  practically  the 
whole  of  the  employed  population,  that  the  em- 
ployer is  liable  to  compensate  the  employed  for  loss 
of  earning  power  through  accident  incurred  by  rea- 
son of  his  employment  and  to  compensate  the  de- 
pendents of  a  workman  for  the  loss  of  his  support 
if  he  dies  as  the  result  of  an  accident  during  his 
employment.  Our  law  establishes  employers' 
liability  according  to  a  certain  schedule,  and  leaves 
it  at  that.  For  the  rest,  the  employer  has  to  face 
his  tremendous  task  as  best  he  can,  and  the  work- 
man has  to  get  his  compensation  out  of  the  em- 
ployer if  he  can.  The  State  may  thus  wash  its 
hands  of  results,  but  certain  results  are  inevitable. 
The  employers  find  it  necessary  to  insure  them- 
selves against  a  great  liability  imposed  upon  them 
by  the  wisdom  of  the  Legislature.  They  insure 


138      WORKMEN'S  COMPENSATION  AND  INSURANCE 

their  workmen  with  various  insurance  companies, 
and  the  consequence  is  that  in  effect  the  injured 
workman,  or  the  dependents  of  a  deceased  work- 
man, have  to  deal  not  with  the  employer  liable  under 
the  law,  but  an  insurance  company  which  has  un- 
derwritten the  employer's  liability.  The  insurance 
company,  not  being  a  philanthropic  institution,  is 
out  to  make  profits  upon  the  State-imposed  liabil- 
ity. It  makes  those  profits  on  the  one  hand  by 
charging  the  employer  as  much  as  possible,  and  on 
the  other  hand  by  paying  the  workman  as  little  as 
possible,  selling  its  insurance  in  the  dearest  market 
and  buying  its  workmen's  claims  in  the  cheapest, 
thus  fulfilling  the  law,  if  not  the  prophets.  There 
are  only  2,000,000  Trade  Unionists  in  the  United 
Kingdom,  and  but  a  small  proportion  of  our  work- 
people are  in  a  position  to  get  advice  as  to  how 
to  proceed  under  the  law.  The  average  workman 
would  as  soon  think  of  employing  a  solicitor  as  of 
flying  to  the  moon,  and  the  contest  between  the 
uninformed  workman  and  the  insurance  company, 
expert  in  resisting  claims,  is  absurdly  unequal. 
Every  year  tens  of  thousands  of  claims  are  whittled 
down  or  inadequately  settled  for  small,  but  tempt- 
ing, lump  sums.  Moreover,  our  law  puts  the  onus 
upon  the  workman  to  show  that  he  cannot  earn 


INSURANCE  FEATURES  139 

wages,  and  the  man  or  woman  who  loses  an  eye  is 
hard  put  to  it  to  get  a  penn'orth  of  compensa- 
tion. .  .  . 

"It  appears  to  me  that  the  German  method  of 
dealing  with  employers'  liability  is  infinitely  supe- 
rior to  ours.  Germany  compels  every  employer  to 
insure  his  workpeople  at  his  own  cost  in  a  mutual 
insurance  fund,  the  employer  thus  merging  his  risk 
with  the  other  employers  in  his  trade.  What  is  the 
result;  or  rather,  what  are  the  results?  First, 
the  employer  obtains  his  insurance  at  cost  price, 
there  being  no  insurance  middleman  to  make  a  profit 
out  of  dire  necessity.  Second,  the  employee  is  as- 
sured of  compensation,  for  the  insurance  institute 
is  under  the  control  of  the  Imperial  Insurance  Of- 
fice. Further,  a  specific  injury,  such  as  the  loss 
of  a  hand  or  of  an  eye,  is  assured  on  a  specific  com- 
pensation. Third,  and  last,  but  not  least,  it  be- 
comes the  direct  and  the  obvious  interest  of  the  em- 
ployers in  each  trade  to  keep  down  the  mutual 
premiums,  and  they  can  only  do  that  by  making 
their  mills  and  factories  safer  working  places.  If 
a  trade  hits  on  a  new  safety  appliance,  it  means  a 
lower  insurance  premium  for  the  trade."  4 

In  the  present  stage  of  thought,  the  main  thesis 

*  Money,  Insurance  vs.  Poverty,  pp.  52-54. 


140      WORKMEN'S  COMPENSATION  AND  INSURANCE 

of  the  foregoing  extract — that  "pure"  workmen's 
compensation,  without  any  provision  for  insurance, 
is  fatally  defective — is  regarded  as  axiomatic.  In 
the  few  of  our  states  which  still  cling  to  the  old  plan, 
there  are  increasing  protests  among  the  enlightened. 
But  there  is  a  real  clash  over  the  methods  of  insur- 
ing, the  agitators  being  mostly  divided  between  two 
camps — the  advocates  of  compulsory  state  insur- 
ance or  compulsory  insurance  in  mutual  associa- 
tions under  close  governmental  supervision  on  the 
one  hand,  and  the  representatives  of  the  private  in- 
surance companies  who  want  competitive  bidding 
for  compensation  business  on  the  other. 

To  the  private  insurance  companies  the  matter  is 
naturally  one  of  immense  importance,  and  an 
enormous  amount  of  literature  has  been  published 
and  distributed  in  the  hope  of  checking  the  tend- 
ency, if  tendency  there  is,  towards  compulsory  state 
insurance.  The  Workmen's  Compensation  Public- 
ity Bureau  in  New  York  City,  supported  by  the 
insurance  companies,  has  been  the  most  active  and 
efficient  agency  for  the  dissemination  of  their  ideas 
on  the  subject;  and  the  Workmen's  Compensation 
Service  Bureau,  through  its  actuarial  activities  in 
a  wide  field,  has  furnished  the  stock  companies  with 
the  weapons  to  fight  state  insurance,  both  in  the 


INSURANCE  FEATURES  141 

forum  and  the  arena  of  active  competition.  The 
monopolistic  state  insurance  acts  of  Washington, 
Oregon,  Nevada  and  Wyoming;  the  semi-monop- 
olistic laws  in  force  in  Ohio  and  West  Virginia; 
and  even  the  state  funds  maintained  in  competition 
with  private  insurance,  which  we  find  in  New  York, 
Idaho,  Maryland,  Michigan,  Montana,  Utah,  and 
some  other  states,  have  been  the  target  of  fierce  at- 
tacks. Every  argument  impugning  the  apparent 
state  socialism  of  these  laws,  and  many  more  based 
on  the  peculiar  nature  of  the  business,  have  been 
utilized  by  the  stock  companies  and  their  ingenious 
advocates.4* 

On  the  other  hand,  state  commissions  and  other 
presumably  unbiased  investigators  have  shown  a 
strong  tendency  to  favor  state  insurance  above  all 
other  forms  of  security  for  awards.  On  the  ques- 
tion of  whether  state  funds  should  be  monopolistic 
there  is  by  no  means  the  same  agreement.  In  New 
Jersey,  for  instance,  the  Reports  of  the  Employers' 
Liability  Commission  for  1914  and  1915  urge  the 
introduction  of  compulsory  insurance,  but  add  that 

4aThat  the  private  insurance  interests  have  strenuously  and  con- 
sistently opposed  attempts  to  inaugurate  state  insurance,  see  Wilson, 
Workmen's  Compensation  and  Employers'  Liability  Acts,  p.  66; 
Clark,  Constitutionality  and  Construction  of  Workmen's  Compensa- 
tion Laws,  p.  286. 


142      WORKMEN'S  COMPENSATION  AND  INSURANCE 

"the  establishing  of  a  State  Fund  would  seem  to 
be  essential  to  ensure  equitable  rates  on  the  part  of 
the  privately  owned  companies  and  associations,  and 
to  prevent  the  establishment  of  a  monopoly,  by 
agreement  or  otherwise,  by  these  companies."  The 
impression,  indeed,  seems  to  be  widespread  that 
competition,  or  potential  competition,  by  the  state 
in  the  field  of  workmen's  compensation  insurance,  is 
chiefly  useful  in  keeping  other  carriers  on  their  good 
behavior.  Those  who  hold  this  view,  however,  are 
to  be  reckoned  among  the  supporters  of  state  funds, 
and  as  answering  the  venomous  strictures  of  out- 
raged private  insurance  with  a  point-blank  refusal 
to  tolerate  the  unrestricted  domination  of  the  great 
public  field  of  compensation  insurance  by  organiza- 
tions having  a  pecuniary  interest  in  the  mainte- 
nance of  high  premium  rates  and  the  disallowance 
of  claims. 

A  very  real  problem  is  presented  by  the  insuffi- 
cient provision  too  often  made  for  future  liabilities 
of  state  funds,  where  they  exist.  One  of  the  grav- 
est dangers  lurking  in  the  way  of  all  experimenters 
in  insurance  is  the  tendency  to  collect  small  premi- 
ums to  pay  for  current  losses  only,  and  not  accum- 
ulate sufficient  reserves  to  meet  deferred  claims. 
Politicians  in  state  legislatures,  afraid  of  offending 


INSURANCE  FEATURES  143 

the  employing  classes  by  exacting  large  payments, 
are  especially  likely  to  be  victims  of  this  fallacy; 
and  there  has  been  a  regretable  tendency  to  incor- 
porate these  errors  into  the  State  insurance  funds, 
many  of  which,  from  an  actuarial  standpoint,  are 
said  to  have  been  insolvent  from  their  inception.5 
To  those  who  point  the  finger  of  scorn  at  these  trans- 
gressions, the  advocates  of  state-managed  insurance 
can  only  say,  that  such  faults  are  to  be  condoned  in 
a  system  scarce  out  of  its  swaddling  clothes ;  that  at 
least  no  serious  catastrophe  has  yet  occurred,  and 
improvements  are  already  perceptible;  and  that  in 
time,  and  with  the  cooperation  of  those  experienced 
actuaries  who  are  as  yet  kicking  against  the  pricks 
in  a  vain  endeavor  to  avert  the  inevitable  substi- 
tution of  state  for  private  insurance  of  compensa- 
tion awards,  the  last  of  the  disquieting  features  of 
amateurish  and  speculative  dealing  with  state  funds 
will  disappear,  and  the  system  become  established 
on  a  sound  and  permanent  business  basis. 

One  of  the  most  frequently  voiced  objections  to 
state  insurance  is  that  it  puts  into  the  hands  of 
political  officials  what  is  essentially  a  matter  of 
pure  business  administration.  As  one  writer  has 

e  Bradbury,  Workmen's  Compensation  and  State  Insurance  Law 
(2d  Ed.),  pp.  63-64. 


144      WORKMEN'S  COMPENSATION  AND  INSURANCE 

phrased  it:  "Should  insurance  as  a  system,  now 
closely  supervised  by  the  State,  be  taken  away  from 
present  agencies  of  great  skill — the  insurance  com- 
panies of  to-day — and  be  remitted  to  our  Ameri- 
can system  of  politics,  partisanship,  and  pull?"  6 
Similar  expressions,  showing  a  lamentably  low 
opinion  of  the  integrity  and  efficiency  of  American 
officialdom,  occur  in  many  publications  on  the  sub- 
ject.7 To  establish  their  contention,  these  writers 
have  cited  a  number  of  circumstances  in  which  man- 
agement by  officials  has  been  notoriously  incompe- 
tent. For  example,  it  is  said  that  state  insurance 
never  results  in  a  proper  differentiation  of  rates,  as 
illustrated  by  the  case  of  Norway,  partly  because 
officials  are  afraid  that  they  would  arouse  suspicions 
of  favoritism  if  they  should  attempt  to  discriminate 
between  particular  establishments,  and  partly  be- 
cause the  endeavor  to  attain  a  cheap  administration 
compels  them  to  dispense  with  the  inspection  force 

e  See  article  by  William  H.  Hotchkiss  on  "The  Case  against  State 
Insurance"  in  The  Outlook,  vol.  103,  pp.  487-490  (March  1, 
1913). 

i  For  similar  expressions  of  distrust,  see  address  by  F.  Robertson 
Jones,  delivered  at  the  Temple  University,  Philadelphia,  Pa.,  Dec.  15, 
1915,  on  "Case  against  State-managed  Insurance  under  Workmen's 
Compensation  Laws,"  at  p.  12;  pamphlet  on  Advantages  and  Disad- 
vantages of  Insurance  in  the  New  York  State  Insurance  Fund  (Feb. 
1916),  at  p.  15;  pamphlet  by  R.  D.  Steele,  Shall  the  State  Engage 
in  the  Insurance  Business?  (Dec.  1911). 


INSURANCE  FEATURES  145 

necessary  to  differentiate  rates  successfully.8 
Again,  the  claim  is  made  that  the  almost  autocratic 
power  given  to  the  officers  in  charge  of  a  state  in- 
surance fund  results  in  a  tendency  on  their  part  to 
distribute  charitable  relief  or  political  favors  at 
employers'  expense.9 

On  the  other  hand,  the  records  of  the  casualty 
companies  themselves  have  been  far  from  clean.  A 
former  superintendent  of  insurance  of  New  York 
State  admits  the  "questionable  practices  which  were 
formerly  resorted  to"  by  some  of  the  corporations 
underwriting  employers'  liability  insurance.  The 
common  law,  however,  with  its  encouragement  of 
litigation  by  leaving  to  courts  and  juries  the  amount 
recoverable  by  an  injured  employee,  is  said  by  this 
writer  to  be  chiefly  responsible  for  the  unpopularity 
of  these  companies — an  unpopularity  so  great  that 
their  mere  inclusion  as  one  of  the  four  groups  of 
carriers  between  which  an  employer  might  elect 
under  the  New  York  compensation  act,  caused  a 
storm  of  protest.  "Definite  and  certain  compensa- 
tion for  each  kind  of  injury,"  we  are  told,  will  put 
an  end  to  "the  controversies  which  have  been  in- 

*  See  "A  Resum£  of  the  Arguments  against  State  Insurance,"  Re- 
vised and  Reprinted  Jan.  1914,  by  Workmen's  Compensation  Pub- 
licity Bureau,  pp.  13-13. 

» Ibid.,  p.  14. 


146      WORKMEN'S  COMPENSATION  AND  INSURANCE 

evitable"  under  the  old  system  of  employers'  liabil- 
ity; and  the  casualty  companies  should  be  left  at 
least  "the  bare  right  to  struggle  for  existence  a  little 
while  longer  in  competition  with  newer — and,  as 
some  people  claim,  better  forms  of  insurance."  10 
A  pitiful  plea! 

The  statements  just  quoted  are  those  of  an  apolo- 
gist for  the  private  companies,  but  they  represent 
the  views  of  that  large  group  of  insurance  men 
who,  besides  being  sufficiently  confident  of  the 
efficiency  of  their  system  not  to  be  afraid  of  fair 
competition  by  the  State,  are  willing  to  concede  the 
bracing  effect  on  all  carriers  of  a  battle  with  state 
and  mutual  insurance.  But  the  disparagement  of 
state  insurance  and  all  inteference  with  what  is 
called  "the  private  concern  of  the  casualty  com- 
panies" is  by  no  means  silenced,  and  finds  voice  in  a 
review  of  the  workmen's  compensation  situation  in 
1916  by  a  prominent  insurance  man: 

"As  a  whole,  the  State  funds  have  accomplished 
nothing  to  demonstrate  their  usefulness  during  the 
year.  In  some  States  these  State  funds  have  made 
decidedly  bad  records,  and  this  is  particularly  true 
of  States  in  which  a  State  fund  monopoly  has  been 

10  Memorandum  submitted  to  the  Governor  in  the  matter  of  the 
Senate  Insurance  Committee's  Workmen's  Compensation  bill,  May, 
1913,  by  the  Superintendent  of  Insurance  (Hon.  William  T.  Emmet). 


INSURANCE  FEATURES  147 

attempted.  .  .  .  The  companies  are  undoubtedly 
harassed  to  an  unreasonable  extent  in  some  direc- 
tions by  what  may  be  called  'too  much  govern- 
ment.' "  " 

The  detailed  criticism  of  the  State  funds— the 
reasons  why  insurance  in  them  is  less  desirable  for 
all  parties  concerned  than  insurance  in  the  casualty 
companies,  according  to  the  advocates  of  the  latter 
— can  only  be  touched  upon  here.  One  ingenious 
critic  has  suggested  that  a  policy  in  the  state  fund  in 
New  York  gives  incomplete  protection  to  the  em- 
ployer, because  it  only  insures  against  his  liability 
under  the  compensation  law,  leaving  all  his  other 
possible  liabilities  (which  the  writer  proceeds  to 
enumerate)  uncovered;  a  contention  which  seems 
easily  answered  by  stating  that  that  is  all  such  a  pol- 
icy was  intended  to  do,  and  that  the  casualty  com- 
panies should  be  glad  to  have  the  residuary  risk  left 
them  to  insure ! 12  The  old  cry  that  "public  service 

11  See  article  in  Financial  section,  New  York  Times,  Dec.  31,  1916, 
by  Walter  G.  Cowles,  vice-president  Travellers'  Insurance  Company, 
at  p.  17. 

12  The  quotation  is  from  P.  Tecumseh  Sherman's  "Advantages  and 
Disadvantages  of  Insurance  in  the  New  York  State  Insurance  Fund" 
(Feb.   1916),  pp.  5  et  seq.    My  criticism  of  Mr.  Sherman's   argu- 
ments may  be  unfair  if  his  real  thesis  is  that  for  an  equivalent  in- 
vestment the  stock  companies  give  more  complete  protection  than  the 
state  fund;  but  if  the  gist  of  his  contention  is  that  the  state  is  at 
fault  in  not  undertaking  to  insure  against  more  risks,  it  is  irrecon- 


148      WORKMEN'S  COMPENSATION  AND  INSURANCE 

is  inferior  to  private  service  both  in  quality  and 
convenience"  is  often  reiterated,13  and  may  be  dis- 
missed with  the  remark  that  the  United  States  Par- 
cels Post  is  a  striking  illustration  to  the  contrary. 
An  argument  worthy  of  more  consideration  is  that 
under  state  insurance  a  "flat"  rate  of  premium,  not 
adjusted  to  the  risk  of  the  particular  establishment, 
is  likely  to  be  adopted;  with  the  result  that  "the  in- 
dividual employer  is  freed  from  any  economic  in- 
ducement to  prevent  accident,  since  his  competi- 
tors must  share  with  him  pro  rata  any  loss  thereby 
incurred."  14  It  is  true  that  there  is  a  tendency  in 
state  insurance  acts,  and  in  the  administration  of 
them,  to  follow  the  line  of  least  resistance  and  treat 
all  members  of  one  trade  class  alike,  regardless  of 
the  degree  of  zeal  for  accident  prevention  displayed. 
In  extenuation  it  may  be  said  that  since  the  state 
by  statute  compels  adherence  to  certain  safety  regu- 
lations, complete  disregard  of  the  employees'  well- 
being  even  by  the  most  conscienceless  employer  is 

cilable  both  with  his  bias  toward  private  insurance  and  his  specific 
arguments  with  regard  to  the  dangers  of  permitting  the  state  ta 
undertake  to  insure  at  all. 

i8J6td,  p.  16. 

"See  pamphlet  by  Edwin  S.  Lott,  <tWhat  Will  Be  the  Best  for 
the  Workman?"  p.  13;  also  Address  by  J.  W.  Lord  on  "Employers* 
Liability  and  Workmen's  Compensation  Laws,"  delivered  at  the  17th 
annual  meeting  of  the  Maryland  State  Bar  Association,  July,  1912,  at 
p.  22. 


INSURANCE  FEATURES  14fr 

impossible;  but,  of  course,  an  ideal  law  would  en- 
courage voluntary  effort  along  humanitarian  lines. 
State  insurance  laws,  however,  do  not  necessarily 
impose  flat  rates ;  and  there  is  reason  to  believe  that, 
as  the  industrial  commissions  grow  in  wisdom  and 
experience,  they  will  follow  more  and  more  the  lead 
of  the  casualty  companies  themselves  in  differentiat- 
ing between  individual  employers,  leaving  a  wider 
discretion  in  the  administrative  officers,  to  the  end 
that  enthusiasm  for  accident  prevention  may  be  en- 
couraged. 

Of  course,  the  attention  and  credence  which  the 
various  arguments  against  state  insurance,  that  I 
have  discussed,  will  receive,  depends  largely  on  the 
reader's  bias.  As  they  are  rooted  in  prejudice,  and 
nourished  on  the  ingenuity  of  special  advocacy,  it 
is  to  be  expected  that  those  who  meet  state  socialism 
more  than  half-way  will  be  ready  with  flat  denials, 
and  theoretical  arguments  of  equal  force  if  a  dif- 
ferent premise  be  conceded.  The  literature  of  de- 
fense is  somewhat  less  accessible  than  that  of  criti- 
cism, but  the  following  account  of  experience  with 
the  California  state-managed  fund,  which  is  oper- 
ated in  free  competition  with  private  companies,  is 
enlightening  in  view  of  the  scornful  comments  on 
official  ineffectiveness : 


150      WORKMEN'S  COMPENSATION  AND  INSURANCE 

"In  spite  of  a  most  strenuous  competition  of  25 
corporate  companies  and  several  inter-insurance 
carriers,  the  business  written  by  the  Fund  exceeded 
all  expectations.  .  .  .  The  mere  establishment  of 
the  fund  caused  compensation  rates  for  the  year 
1914  to  be  reduced  about  25  per  cent.  Its  experi- 
ence during  the  past  12  months  has  demonstrated 
beyond  question  that  .the  rates  fixed  for  California 
by  the  Workmen's  Compensation  Service  Bureau 
have  been  too  high.  .  .  .  To  secure  1915  business, 
one  of  the  stock  companies  has  announced  a  flat  re- 
duction of  30  per  cent,  in  rates.  Others  are  carry- 
ing risks  for  a  month  or  more  free  of  charge.  .  .  . 
Several  companies  have  already  withdrawn  from 
the  field.  The  fund,  however,  even  with  a  greatly 
increased  office  force,  has  been  unable  to  keep  up 
with  the  business  which  has  come  to  it  with  the  open- 
ing of  the  new  year."  1B 

The  report  of  the  California  Industrial  Accident 
Commission  for  the  year  ending  June  30,  1915, 
showed  the  Fund  approximately  $144,000  ahead 
of  its  nearest  competitor  in  net  compensation  insur- 
ance premiums ;  the  department  stating  that  "it  has 
now  been  demonstrated  beyond  a  doubt  that  it  is 

« Ira  B.  Cross  in  The  Survey,  vol.  XXXIV,  pp.  173-174,  (May  22, 
1915). 


INSURANCE  FEATURES  151 

possible  for  the  State  permanently  and  economically 
to  conduct  an  insurance  enterprise."  16 

And  finally,  the  Industrial  Accident  Commis- 
sioner's report  for  the  year  ending  June  30,  1916, 
says:  "That  the  State  Compensation  Insurance 
Fund  of  California  has  proved  a  pronounced  suc- 
cess is  now  generally  conceded  by  all  who  have  been 
in  a  position  to  watch  its  progress.  Since  the  end 
of  its  first  year,  when  its  volume  of  compensation 
premiums  exceeded  that  of  any  other  insurance  car- 
rier operating  in  the  state,  its  commanding  lead 
over  competitors  has  steadily  increased  and  its  as- 
sets have  grown  to  an  amount  exceeding  $1,000,- 
000."  17 

The  statement  has  so  often  been  made,  that  no 
state-managed  fund  can  survive  in  fair  competition 
with  the  established  private  companies,  that  the 
passage  just  quoted  is  especially  significant;  for, 
of  all  the  American  jurisdictions  which  have  state 
insurance  of  workmen's  compensation,  California 
has  adopted  the  fairest  regulations  as  to  competi- 

18  Report  of  California  Industrial  Accident  Commission,  July  1, 
1914,  to  June  30,  1915,  reviewed  in  Monthly  Review  of  U.  S.  Bureau 
of  Labor  Statistics,  voL  II,  No.  5,  pp.  51-54  (May,  1916). 

if  Report  of  California  Industrial  Accident  Commission  (see  text)  ; 
reviewed,  Monthly  Review,  U.  S.  Bur.  of  Labor  Statistics,  voL  IV, 
No.  3,  p.  409  (Mar.  1917). 


152      WORKMEN'S  COMPENSATION  AND  INSURANCE 

tion.18  The  State  Insurance  Commissioner  is  re- 
quired to  issue  a  uniform  classification  of  risks  and 
premium  rates,  which  must  be  adhered  to  by  all 
compensation  carriers,  including  the  State  fund.19 
Underwriters  all  start  on  an  even  basis,  and  the 
fact  that  the  State  fund  has  been  able  practically 
to  crowd  private  companies  out  of  the  field  of  com- 
pensation insurance,  is  a  striking  refutation  of  the 
aspersions  on  oificial  incompetence. 

The  report  of  the  Maryland  commission  on  the 
operation  of  the  workmen's  compensation  law  for 
the  year  ending  October  31,  1915,  also  throws  light 
on  the  success  of  a  state  accident  fund  in  competi- 
tion with  private  insurance.  Only  7  per  cent,  of 
the  business  was  underwritten  by  the  State  fund; 
but  the  appearance  of  this  new  rival  seems  to  have 
put  the  fear  of  God  in  the  hearts  of  the  insurance 
companies,  for  premium  rates  were  reduced  about 
15  per  cent.20 

In  Massachusetts  there  is  no  genuine  state  insur- 

is  See  author's  note  in  17  Columbia  Law  Review  75-78  (Jan.  1917). 
Insurance  concerns  in  California  are  permitted  to  operate  under  con- 
ditions which  would  prevent  their  getting  licenses  in  many  states. 
Report  of  Cal.  Industrial  Accident  Comm.,  July  1,  1915,  to  June  30, 
1916,  at  page  26. 

i»  CaL  Laws  1915,  c.  642. 

20  First  Annual  Report  of  State  Industrial  Accident  Commission 
of  Maryland,  for  year  Nov.  1,  1914,  to  Oct.  1,  1915. 


INSURANCE  FEATURES  153 

ance ;  but  an  Employees'  Accident  Insurance  Asso- 
ciation, operated  on  the  mutual  plan,  in  competi- 
tion with  other  mutual  and  stock  companies,  is 
created  by  the  compensation  law.21  For  the  two 
and  one-half  years  from  July  1,  1912,  to  December 
81,  1914,  the  total  expense  of  operation  of  the  stock 
companies  was  32.81%  of  earned  premiums  in  1912, 
35.68%  in  1913,  and  36.33%  in  1914,  while  the  per- 
centages for  the  mutuals  were  14.17, 17.02  and  17.37 
for  the  same  periods.22  These  discrepancies  were 
so  serious  as  to  arouse  suspicion  both  that  premium 
rates  were  exorbitant  and  that  a  monopoly  or  com- 
bination to  fix  rates  existed  among  the  insurance 
companies ;  and  accordingly  a  commission  of  investi- 
gation was  appointed  by  the  legislature  of  1914.28 
The  investigators  reported  that  practically  all  the 
stock  companies  writing  insurance  in  the  state  were 
members  of  the  Workmen's  Compensation  Service 
Bureau  in  New  York  City,  and  had  authorized  a 
single  man  to  change  compensation  rates  for  Mas- 
sachusetts alone  for  competitive  purposes — an  ar- 
rangement characterized  as  "indefensible."  Under 
this  plan,  however,  premium  rates,  which  had  been 

21  Mass.  Acts  1911,  c.  751,  Pt.  IV. 

22  Monthly  Review  of  U.  S.  Bureau  of  Labor  Statistics,  vol.  II,  no. 
5,  p.  55  (May,  1916). 

23  Mass.  Acts  and  Resolves  1914,  c.  160  of  Resolves. 


154      WORKMEN'S  COMPENSATION  AND  INSURANCE 

scandalously  high  formerly,  had  been  materially 
reduced,  though  some  sort  of  equalization  was 
needed.  The  necessity  of  state  supervision  and 
regulation  is  strongly  affirmed  by  the  Commission.24 

Another  state  which  has  found  mutual  insurance 
more  economical  than  that  conducted  by  stock  com- 
panies is  Wisconsin.  The  Industrial  Commission 
stated  under  date  of  June  1,  1915,  that  if  all  com- 
pensation insurance  during  1914  had  been  carried 
in  Wisconsin  mutuals  the  net  saving  to  employers 
would  have  been  over  $500,000  of  the  premiums 
actually  paid.25  A  table  of  expense  benefits  shows 
that  Wisconsin  mutuals  paid  60  cents  on  the  dollar, 
in  benefits  to  workmen,  as  against  48  cents  by  stock 
companies;  22  cents  as  surplus  to  policyholders  as 
against  the  private  insurers'  14  cents  to  stockhold- 
ers; and  only  18  cents  were  spent  on  agents,  ad- 
justments, and  all  other  expenses,  whereas  the  stock 
companies  paid  38  cents  for  those  purposes.26 

In  its  very  first  report,  the  Iowa  Industrial  Com- 
mission bewails  the  "oppressive  insurance  premiums 
charged  by  the  private  companies."  In  coal  mines, 

24  Monthly  Review  (supra),  vol.  II,  no.  1,  pp.  45-48  (Jan.  1916). 

26  Wis.  Industrial  Commission,  Workmen's  Compensation  Insurance 
Bulletin,  issued  June  1,  1915,  and  reviewed  in  Monthly  Review  of 
U.  S.  Bureau  of  Labor  Statistics,  vol.  II,  no.  1,  pp.  53-62,  especially 
p.  54  (Jan.  1916). 

2«  Ibid.,  p.  55. 


INSURANCE  FEATURES  15.5 

for  instance,  the  basic  rate  was  $6.50  per  $100  of 
pay  roll  as  compared  with  $1.50  under  the  State 
fund  plan  in  Ohio.  The  Commission  says:  "A 
collective  fund  administered  by  the  State  is  a  rem- 
edy for  all  these  evils  and  inequalities.  Such  a 
system  would  make  an  end  of  excessively  high 
rates."  27 

The  Montana  compensation  law,  which  provides 
for  state  insurance  in  competition  with  both  mutual 
and  stock,  has  not  only  brought  about  a  reduction  in 
rates,  but,  according  to  the  commission  which  ad- 
ministers it,  has  obtained  a  superlative  degree  of 
success:  "Only  two  assessments  were  levied 
against  these  firms  during  the  year  at  a  total  cost 
to  employers  of  a  little  more  than  one-half  of  one 
per  cent,  on  their  annual  pay  rolls,  'which  perhaps 
represents  as  low  an  insurance  cost  to  employers 
operating  under  compensation  laws  as  exists  any- 
where in  the  world.  Yet,  despite  this  low  premium 
cost,  a  surplus  of  $22,684.56  has  been  accumulated 
in  the  fund  which  represents  three  times  the  amount 
that  has  been  paid  out.'  "  28 

Some  of  the  difficulties  which  attend  upon  the  in- 
itiation of  such  a  novel  scheme  as  state  insurance  of 

27  Monthly  Review  (supra),  vol.  II,  no.  2,  pp.  61-63  (Feb.  1916). 

28  Monthly  Review  (supra),  vol.  Ill,  no.  6,  pp.  22-26  (Dec.  1916). 


156      WORKMEN'S  COMPENSATION  AND  INSURANCE 

compensation  awards  are  illustrated  by  the  experi- 
ence of  the  West  Virginia  Public  Service  Commis- 
sion. The  premiums  for  the  first  three  years  in  the 
mining  industries,  estimated  to  have  been  ample  to 
provide  for  all  liability  growing  out  of  accidents 
during  that  period,  proved  greatly  inadequate, 
owing  to  an  increased  number  of  permanent  and 
fatal  injuries,  especially  in  the  Eccles  mine  disaster 
of  April  28, 1914.  The  maximum  rate  of  premium 
under  the  law  was  $1  per  $100  of  pay  roll;  but  the 
loss  ratio  for  the  first  9  months  was  $2.08  per  $100. 
To  overcome  the  deficit  a  rate  of  $1.89  per  $100 
will  have  to  be  assessed  in  the  coal-mining  indus- 
try for  a  period  of  four  years ;  and  in  mining  other 
than  coal  an  average  rate  of  $1.54  per  $100  of 
pay  roll  will  be  required.  Such  miscalculations 
lend  color  to  the  contention  of  the  private  com- 
panies that  inexperience  will  seriously  handicap 
state  insurance;  but  the  disasters  with  which  the 
West  Virginia  fund  has  had  to  cope  are  of  such  rare 
and  exceptional  nature  as  to  warrant  the  belief  that 
a  very  little  more  elasticity  in  the  powers  of  the 
administrative  commission  will  prepare  it  for  any 
contingency.29 

The  Ohio  State  Insurance  Fund  is  one  of  the 

20  Monthly  Review  (supra),  voL  II,  no.  2,  pp.  76-81  (Feb.  1916). 


INSURANCE  FEATURES  157 

oldest  and  most  successful  of  its  kind.  In  its  State- 
ment of  Condition,  under  date  of  May  15, 1916,  are 
collected  statistics  which  present  a  triumphant  refu- 
tation of  the  criticisms  of  unbusinesslike  manage- 
ment levelled  against  the  system  by  its  enemies. 
The  Fund  is  "in  an  ideal  condition  of  solvency": 
and  a  comparison  of  its  current  rates  for  82  repre- 
sentative industries  with  those  of  liability  insurance 
companies  in  neighboring  states  shows  that  the  Ohio 
system  effects  a  great  saving  for  the  employer. 
Taking  the  charges  of  the  Fund  as  100%,  the  per- 
centages of  the  States  examined  are:  Pennsyl- 
vania, 137;  Indiana,  157;  Michigan,  160;  Illinois, 
201;  Wisconsin,  215;  Kentucky,  225;  Ohio  (stock 
companies),  232.  These  amazing  differences  are 
partly  explained  by  the  fact  that  the  Ohio  plan  has 
been  operated  at  an  expense  ratio  equivalent  to 
11%  of  the  earned  premiums  as  compared  with  an 
expense  ratio  of  the  liability  companies  of  45  %.30 

"The  claim  of  superior  service  advanced  by  the 
stock  companies  is  without  foundation  in  fact,"  is 
the  statement  made  in  a  publication  of  the  New 
York  State  Insurance  Fund  and  indorsed  by 
the  Industrial  Commission.31  To  this  may  be 

so  Monthly  Review  (supra),  vol.  Ill,  no.  3,  pp.  60-63  (Sept.  1916). 
si  Monthly  Review  (supra),  vol.  II,  no.  4,  at  p.  64  (April,  1916). 


139      WORKMEN'S  COMPENSATION  AND  INSURANCE 

added  the  pointed  reference  made  by  the  superin- 
tendent of  insurance  in  his  1915  report  to  "the 
higher  cost  of  stock  insurance  with  its  agency  ex- 
pense," as  proof  of  the  growing  recognition  of  the 
fallacy  of  one  of  the  chief  arguments  against  the 
state  plan.32 

Indeed,  the  New  York  State  Insurance  Fund 
charges  rates  that  average  20%  lower  than  those  of 
the  casualty  companies,  and  has  paid  dividends 
averaging  20%  of  the  first  policy  term  and  15%  on 
the  second.33  The  high  degree  of  security  offered 
to  employers  and  employees  is  another  great  ad- 
vantage; and  the  charge  that  politics  have  played 
any  part  in  the  administration  of  the  New  York 
fund  is  declared  to  be  unfounded.34 

A  suggestion  of  inexpertness  in  the  drafting  of 
the  compensation  law  of  Nevada  is  conveyed  by  the 
report  of  the  operation  of  the  act  for  the  30  months 
ending  December  81,  1915.  The  framers  intended 
that  10  per  cent,  of  premium  income  should  be  set 

82  Preliminary  text  and  tables,  57th  annual  report  of  superin- 
tendent of  insurance,  covering  transactions  of  calendar  year  closing 
Dec.  31,  1915.  Reviewed,  Monthly  Review  (supra),  vol.  II,  no.  4,  pp. 
64-66  (April,  1916). 

88  See  article  by  F.  Spencer  Baldwin  on  "Advantages  and  Disad- 
vantages of  State  Funds  in  Workmen's  Compensation,"  in  Amer. 
Labor  Legislation  Review,  voL  IV,  p.  3  (March,  1916). 

s*  Ibid.,  pp.  5,  10. 


159 


aside  for  the  purpose  of  creating  an  insurance  re- 
serve fund  to  provide  for  and  absorb  the  shock  of  a 
catastrophe  without  doing  violence  to  the  general 
fund;  but  during  the  period  covered  by  the  report 
receipts  fell  short  of  being  sufficient  to  create  this 
reserve  by  $16,790.21,  or  nearly  one-third  of  the 
amount  needed.  That  is  to  say,  the  actuarial  cal- 
culations of  the  framers  failed  in  operation  to  meet 
the  current  demands,  and  the  resultant  shortage  had 
to  be  made  up  out  of  the  fund  designed  as  a  re- 
serve, though  there  appear  to  have  been  no  particu- 
larly heavy  casualties  to  account  for  the  situation.35 
As  Nevada  is  one  of  the  states  in  which  monopolistic 
state  insurance  obtains,  these  official  errors  are  fair 
game  for  the  enemies  of  the  system. 

For  the  most  part,  however,  the  reports  we  have 
reviewed  are  a  record  of  success  for  state  insurance, 
even  under  the  test  of  severe  competition  with  the 
established  private  carriers.  We  are  far  from  over- 
looking the  element  of  bias  in  the  statements  of 
officials  charged  with  the  success  of  the  system ;  but 
we  are  unable  to  avoid  the  conclusion,  from  the 
facts  and  figures  set  before  us,  that  in  actual  opera- 
tion state  insurance  has  given  the  lie  to  those  who 

85 Monthly  Review  (supra),  vol.  Ill,  no.  3,  pp.  55-^58  (Sept.  1916).. 


160      WORKMEN'S  COMPENSATION  AND  INSURANCE 

accused  the  theory  of  fatuity,  and  its  administrators 
of  corruption  and  inefficiency.36 

There  is  no  attempt  to  disparage  the  excellent 
work  done  by  the  private  companies  along  lines  of 
actuarial  calculation,  accident  prevention,  etc. 
Without  this  expert  smoothing  of  the  way,  the  un- 
dertaking of  insuring  compensation  awards  would 
have  been  a  dangerous  venture  for  governmental 
agencies.  I  have  before  me  now  a  pamphlet  of  174 
pages  entitled  "Safeguards,"  profusely  illustrated, 
with  illuminating  text,  devoted  wholly  to  practical 
suggestions  for  the  operation  of  industrial  plants 
with  greater  safety  to  the  toilers,  explaining  the 
most  modern  and  effective  devices  for  safe-guard- 
ing machinery  as  well  as  the  precautions  the  work- 
man himself  should  take  in  handling  it.  This  is  a 
publication  of  the  2Eitna  Life  Insurance  Com- 
pany.87 The  Monthly  Review  of  the  United  States 
Bureau  of  Labor  Statistics  for  November,  1916, 

86  Of  course,  there  have  been  some  falls  from  grace.    Gov.  Whit- 
man of  New  York,  in   an  Emergency  Message  to  the  Legislature 
under  date  of  Feb.  3,  1915,  which  has  been  seized  on  with  avidity  by 
the  enemies  of  state  insurance,  accuses  the  Workmen's  Compensation 
Commission  of  "gross  extravagance  and  waste."    German  compensa- 
tion insurance,  and  particularly  the  Imperial  Insurance  Office,  has 
been  severely  arraigned  by  Dr.  Ferdinand  Friedensburg,  a  former 
president    (The   Practical   Results   of   Workmen's   Compensation  in 
Germany,  1911). 

87  Safeguards  (for  the  prevention  of  Industrial  Accidents),  edited 
by  David  Van  Schaack  (Hartford,  Conn.:  ^Etna  Life  Ins.  Co.,  1910). 


INSURANCE  FEATURES  161 

comments  on  the  activity  of  the  Workmen's  Com- 
pensation Service  Bureau,  an  organization  sup- 
ported by  a  group  of  insurance  companies,  in  an- 
alyzing the  statistics  of  accident  losses  with  a  view 
to  ascertaining  the  lowest  practicable  compensation 
rates.38  Such  work  cannot  be  too  highly  com- 
mended. 

But  it  is  difficult  to  see  why  this  success  of  pri- 
vate companies  in  preparing  the  ground  should  be 
an  argument  for  the  continuance  of  compensation 
business  in  their  hands,  after  the  social  cost  of  some 
other  system  has  been  proven  to  be  less.  Vested 
interests  should  be  protected  so  far  as  is  consistent 
with  the  public  good ;  but  we  are  far  from  admitting 
that  private  companies  have  acquired  such  a  claim 
on  the  traffic  in  compensation  insurance  that  the 
combined  interests  of  employer,  employee,  and  con- 
suming public  should  be  subordinated  thereto. 
There  is  some  force  in  the  plea  of  the  stock  com- 
panies to  be  allowed  to  compete,  though  competi- 
tion tends  to  undermine  security  by  reducing  rates 
below  the  margin  of  safety,  and  by  inducing  extrav- 
agant selling  costs ; 39  but  none  in  the  demand  that 

ss  Monthly  Review  of  U.  S.  Bureau  of  Labor  Statistics,  vol.  Ill, 
no.  5,  pp.  (629)-(631),  (Nov.  1916). 

39  See  "Plea  for  an  Open  Field"  in  The  Independent,  vol.  LXXIV, 
p.  788  (April  3,  1913) ;  also  "State  Insurance,"  an  address  by  Arthur 


162      WORKMEN'S  COMPENSATION  AND  INSURANCE 

the  state  shall  wash  its  hands  of  compensation  in- 
surance. 

In  this  connection  the  claims  of  the  mutual  sys- 
tem to  our  attention  must  not  be  overlooked.  No 
less  an  authority  than  Dr.  Rubinow,  after  advocat- 
ing "a  freedom  of  choice  between  stock  casualty 
companies,  mutual  associations,  and  state  insur- 
ance funds,"  has  stated  that  "European  experience 
has  conclusively  shown  that  when  such  competition 
is  permitted,  mutual  associations  slowly  but  inevi- 
tably grow  at  the  expense  of  all  other  insurance 
institutions."  40 

This  claim  does  not  seem  wholly  to  be  borne  out 
in  the  experience  of  our  American  states — thus,  in 
New  York,  "notwithstanding  the  higher  cost  of 
stock  insurance  with  its  agency  expense,  the  em- 
ployers, as  a  whole,  seem  to  prefer  that  form  of  pro- 
tection," 76  per  cent,  of  the  workmen's  compensa- 
tion risks  having  been  carried  by  stock  companies, 
13  per  cent,  in  the  state  insurance  fund,  and  only  11 
per  cent,  by  mutual  companies  during  the  year 
1915.41  In  California,  as  we  have  seen,  state  in- 

I.  Vorys  before  the  Insurance  Federation  of  Ohio,  Cincinnati,  Feb, 
26,  1914.  But  see  24  Journal  of  Political  Economy,  pp.  958  et  seq., 
for  an  account  of  the  dangers  of  competition  among  workmen's  com- 
pensation insurance  carriers. 

*o  Rubinow,  Social  Insurance,  p.  187. 

«i  Preliminary  text  and  tables,  57th  annual  report  of  the  super- 


163 

surance  has  been  carrying  all  before  it,  both  mutual 
associations  and  stock  companies  being  forced  into 
the  background.  A  recent  review  of  the  compen- 
sation situation  puts  the  business  of  all  the  mu- 
tual compensation  companies  at  not  more  than 
5  per  cent,  of  the  premiums  paid  for  workmen's 
compensation  insurance  in  the  United  States  dur- 
ing 191 6.42  It  is  only  in  Massachusetts  and  Wis- 
consin that  mutual  insurance,  regulated  in  many 
details  by  the  state,  has  been  having  a  really  tri- 
umphant progress,  as  already  described.  In  those 
states,  it  will  be  noted,  there  is  no  state-managed 
insurance;  so  the  best  that  can  be  said  for  the 
mutual  plan,  in  the  light  of  the  meager  American 
experience,  is  that  in  the  few  instances  in  which 
it  has  justified  itself  its  elimination  of  the  element 
of  private  profit  has  enabled  it  to  compete  success- 
fully with  the  ordinary  casualty  companies. 

It  may  be  that  the  State  insurance  of  the  future 
will  expand  the  principle  of  mutuality  (a  principle 
already  recognized  in  the  Oregon  compensation 
law  4S ) ,  by  calling  on  employer  and  employee  alike 

intendent  of  insurance  of  New  York,  covering  transactions  of  calen- 
dar year  closing  Dec.  31,  1915.  Reviewed  in  Monthly  Review  (su- 
pra), vol.  II,  no.  4,  pp.  64-65  (April,  1916). 

42  See  footnote  11. 

*»  Oregon  Laws  1913,  c.  112,  sec.  19. 


164      WORKMEN'S  COMPENSATION  AND  INSURANCE 

to  contribute  to  the  Fund ;  but  nothing  that  has  as 
yet  been  revealed  has  really  discredited  the  State 
as  an  underwriter  in  favor  of  "pure  mutuals." 
The  superior  stability  of  a  state-managed  fund,  its 
economy,  the  public  interest  in  the  subject-matter* 
and  the  moral  responsibility  of  the  commonwealth 
for  the  fund's  solvency,  (a  responsibility,  we  insist,, 
that  would  cheerfully  be  shouldered  in  case  of  need, 
despite  the  legal  barriers  which  some  legislatures 
have  seen  fit  to  erect  against  its  enforcement),  are 
all  reasons  for  placing  workmen's  compensation  in- 
surance in  the  hands  of  government  agencies, 
against  which  the  arguments  springing  from  pe- 
cuniary bias  or  un-American  distrust  in  the  honesty 
and  capacity  of  officials  of  the  people's  choice  can- 
not long  prevail. 

Economy  has  been  mentioned  as  among  the  posi- 
tive advantages  of  compulsory  monopolistic  state 
insurance.  A  cautious  writer  has  estimated  that 
stock  companies  in  the  United  States  absorb  at 
least  60  cents  for  every  dollar  of  compensation 
benefits  actually  reaching  the  injured  party;  and 
even  large  and  well-managed  mutuals  maintain  an 
expense  ratio  of  from  30  to  35  cents.44  In  the  Ger- 

««  E.  H.  Downey  in  24  Journal  of  Political  Economy,  pp.  9T7-97& 
(Dec.  1916). 


INSURANCE  FEATURES  16* 

man  Empire,  on  the  other  hand,  the  cost  of  admin- 
istration is  only  16  per  cent  of  the  benefits  paid;  in 
Norway,  15  per  cent;  in  Ontario,  13  per  cent;  and 
in  the  State  of  Washington,  9  per  cent.45  As  some 
form  of  monopolistic  state  insurance  is  in  force  in 
all  of  these  latter  jurisdictions,  the  significance  of 
the  low  expense  ratios  is  at  once  apparent. 

Competitive  waste  is  in  large  measure  responsi- 
ble for  the  costliness  of  the  haphazard  methods  of 
insuring  compensation  awards  that  prevail  in  most 
of  our  states.  It  is  said  that  employers  in  New 
York  State  pay  about  $5,000,000  annually  for  the 
"luxury  of  competing  insurance";  and  that  for  the 
same  premiums,  under  an  economical  centralized 
management,  fully  25  per  cent  could  be  added  to 
the  aggregate  of  compensation  benefits.46  The 
elimination  of  selling  costs  is  the  chief  saving  ac- 
complished by  monopolistic  state  insurance;  and 
when  the  obligation  to  insure  is  compulsory  on  all 
employers,  there  is  no  economic  justification  what- 
ever for  the  solicitation  which  is  a  concomitant  of 
the  competitive  system.  A  certain  duplication  of 
administrative  staffs,  claim  adjusters,  and  so  forth,, 
is  also  done  away  with  when  the  State  takes  over 
the  exclusive  control  of  compensation  insurance. 

« Ibid.  «  Ibid.,  p.  979. 


166      WORKMEN'S  COMPENSATION  AND  INSURANCE 

The  superior  security  of  the  monopolistic  state- 
managed  fund  is  another  of  its  advantages.  Its 
subscribers  cannot  withdraw  at  will,  and  the  power 
of  assessments  in  a  group  of  establishments  of  any 
considerable  size  will  always  suffice  to  meet  accru- 
ing payments  to  workmen  on  account  of  accidents. 
Premiums  can  be  kept  low  enough  to  cover  only 
current  disbursements,  and  yet  the  fund  will  be 
solvent;  for  if  the  number  of  accidents  increases, 
an  increased  rate  or  special  payment  may  be  ex- 
acted without  hardship  because  of  the  large  number 
of  establishments  among  which  the  burden  will  be 
distributed.  The  conjectural  element,  so  much  of 
a  problem  to  private  insurance  carriers,  who  must 
fix  their  rates  in  advance  and  cannot  resort  to  the 
assessment  panacea,  is  absent.47 

It  is  because  the  day  of  reckoning  in  work  acci- 
dent insurance  is  so  long  postponed  that  the  reduc- 
tion of  rates  below  the  margin  of  safety  by  carriers 
bidding  against  each  other  and  underestimating  the 
magnitude  of  the  deferred  liabilities,  is  an  ever- 
present  danger  of  the  competitive  system.  The 
fiddler  must  be  paid  in  the  end;  but  the  insurance 
companies  are  meanwhile  "free,  so  far  as  cash  obli- 
gations go,  to  demoralize  their  rates  and  waste  their 

«T  Ibid.,  pp.  963-964. 


INSURANCE  FEATURES  167 

substance  in  fancy  salesmanship." 48  When  the 
state  steps  in,  with  its  control  of  both  reserves  and 
rates,  and  with  the  whole  volume  of  compensation 
business  in  the  hands  of  a  single  responsible  carrier, 
a  stability  is  attained  which  is  impossible  under  a 
system  that  tempts  small  companies,  liable  to  be 
wrecked  completely  by  a  single  great  disaster  owing 
to  the  inconsiderable  volume  of  their  business  and 
the  consequent  insufficiency  of  their  reserves,  to 
count  on  a  loss  ratio  no  worse  than  the  average.49 

Compulsory  state-managed  insurance  is  not  only 
superior  to  competitive  insurance  in  security  and 
economy,  but  it  makes  for  a  more  equitable  distri- 
bution of  accident  cost.  Competition  leads  to  an 
infinite  subdivision  of  risk  classes.  The  less  haz- 
ardous members  of  a  group  are  singled  out  at  once 
by  carriers  eager  to  underwrite  their  risks;  less  at- 
tractive clients  are  served  by  some  companies  and 
scorned  by  others;  until  the  members  of  a  homo- 
geneous group  of  employers  in  a  given  industry  are 
scattered  so  widely  among  the  various  carriers  that 
anything  like  accurate  data  upon  which  to  base  sci- 

48  Ibid.,  p.  958.  Statistics  from  Massachusetts  and  Michigan  are 
cited  by  Mr.  Downey  to  show  the  disastrous  situation  brought  about 
by  rate-cutting  by  competing  carriers.  See  also  The  Annals,  vol. 
LXX,  p.  308  (March,  1917). 

«  Ibid. 


168      WORKMEN'S  COMPENSATION  AND  INSURANCE 

entific  premium  rates  is  wholly  unobtainable. 
Conjectural  rates  are  resorted  to,  resulting  un- 
avoidably in  unfair  discrimination  between  risk 
classes,  and  in  temptation  either  to  charge  individ- 
uals too  little  in  order  to  undermine  the  business  of 
a  rival ,  or  too  much  on  the  principle  of  exacting  all 
that  the  traffic  will  bear.  These  conditions  are  the 
more  apt  to  prevail  because  the  bulk  of  insurance 
is  sold  through  solicitors,  who  are  paid  on  a  per- 
centage basis  and  are  therefore  interested  solely  in 
the  volume  of  premiums,  and  not  at  all  in  the  ade- 
quacy or  equity  of  rates.50 

The  remedy  for  the  evils  we  have  described  is 
not  governmental  supervision,  for  the  best  that  the 
supervising  authority  can  do  is  to  take  the  com- 
bined results  of  the  experience  of  the  various  com- 
panies and  substitute  its  judgment  for  that  of  the 
skilled  underwriters  who  already  have  the  matter 
in  hand.  Doubtless  some  good  can  be  accom- 
plished by  state  regulation,  especially  where  it 
comprises  all  carriers  and  is  authorized  to  apply 
"merit  rating"  to  individual  risks;  but  risk  classes 
under  competitive  conditions  never  have  a  sufficient 
exposure  to  enable  anybody  to  determine  a  proper 
rate  from  actual  experience.  Moreover,  the  flexi- 

BO  J bid.,  p.  970;  see  also  Gephart,  Insurance  and  the  State,  p.  187. 


INSURANCE  FEATURES  169 

bility  which  is  cited  as  the  chief  advantage  of  private 
insurance  disappears  with  too  rigid  regulation. 

The  establishment  of  monopoly,  on  the  other 
hand,  "greatly  lessens  the  pressure  toward  minute 
splitting  up  of  risk  classes  .  .  .  and  makes  possible 
a  retrospective  rating  system  whereby  accident  cost 
is  measured  by  actual  outlays."  51  The  retrospec- 
tive (or  assessment)  plan  results  automatically  in 
distributing  the  abnormal  loss  of  a  catastrophic 
year  in  an  industry  over  a  whole  generation,  and 
makes  possible  the  application  of  the  "principle  of 
occupational  risks  to  much  smaller  industrial 
groups  than  is  possible  to  competitive  insurers." 52 
It  is  true  that  many  state  funds  have  failed  to  take 
advantage  of  the  possibilities  for  scientific  risk 
classification  which  the  possession  of  their  monop- 
oly renders  available,  and  have  clung  to  the  falla- 
cious "capitalized-reserve"  plan.  But  the  door  to 
better  things  is  opened  when  compulsory  state- 
managed  insurance  is  adopted,  and  with  a  combi- 
nation of  intelh'gence  and  impartiality  in  adminis- 
tration an  infinitely  more  equitable  distribution  of 
accident  cost  is  possible  than  under  competitive  con- 
ditions. 

The  author  has  stated  elsewhere,  and  here  re- 

ci  Ibid.,  p.  973.  62  Ibid.,  p.  973. 


170      WORKMEN'S  COMPENSATION  AND  INSURANCE 

iterates  most  emphatically,  that  workmen's  com- 
pensation can  serve  no  higher  purpose  than  the 
prevention  of  industrial  accidents.  Devised  pri- 
marily to  bring  about  a  more  just  distribution  of  a 
burden,  its  utility  increases  a  thousandfold  if  it  also 
serves  to  lessen  the  weight  of  that  burden.  Indeed, 
that  form  of  compensation  administration  which 
brings  about  the  greatest  reduction  in  accidents 
may  fairly  be  said,  without  further  examination  of 
its  merits,  to  have  made  the  greatest  contribution 
to  social  welfare. 

The  proper  study  of  the  insurance  carrier  in  this 
field  has  been  said  to  be  to  "stimulate  prevention 
both  by  advice  and  instruction,  and  by  furnishing 
a  pecuniary  incentive  in  the  way  of  merit  rating." 53 
The  employer,  who  alone  controls  working  condi- 
tions, is  primarily  to  blame  if  they  are  unsafe  and 
unsanitary;  and  much  may  be  done  by  awakening 
him  to  a  sense  of  his  social  responsibility  through 
propaganda  and  well-directed  public  opinion. 
Much,  too,  has  been  and  will  be  accomplished  by 
safety  appliance  acts  and  other  forms  of  legislative 
interference;  but  when  all  is  said,  the  influence  ex- 
erted by  measures  directly  affecting  the  employer's 
pocketbook  constitutes  the  most  powerful  weapon 

es  Ibid. 


INSURANCE  FEATURES  171 

that  can  be  wielded  in  behalf  of  accident  pre- 
vention. It  is  here  that  the  insurance  carriers, 
through  their  control  over  rates,  have  the  greatest 
opportunity  for  public  service. 

Under  competitive  conditions,  "merit  rating" — 
that  is,  the  adjustment  of  premiums  by  the  carrier 
so  that  that  employer  is  charged  the  least  whose 
record  shows  the  smallest  proportion  of  accidents, 
or  whose  adoption  of  safety  appliances  augurs  best 
for  the  welfare  of  the  workers — is  apt  to  be  con- 
spicuous by  its  absence.  There  is  no  inducement 
to  install  safety  devices  when  the  employer  knows 
that,  if  one  liability  company  attempts  to  raise  the 
rates,  another  will  always  be  ready  to  write  his 
business  at  the  old  rate  or  a  lower  one.54  Once  a 
risk  is  taken,  of  course,  no  carrier  is  blind  to  the 
advantages  of  kindling  the  zeal  of  the  insured  for 
measures  which  will  lessen  the  probability  of  a  pay- 
ment having  to  be  made;  and  the  excellent  work 
of  some  of  the  stock  companies  in  instructing  work- 
men and  employers  in  safety  measures  has  already 
been  adverted  to  in  these  pages.  But  the  faults 
of  a  prospective  customer  are  apt  to  be  overlooked 
in  the  scramble  for  business  among  competing  con- 
cerns, and  the  same  haphazard  subdivision  of  risk 

6*  Gephart,  Insurance  and  the  State,  pp.  187-188. 


172      WORKMEN'S  COMPENSATION  AND  INSURANCE 

classes  and  speculative  rate-making  which  have 
made  competitive  workmen's  compensation  insur- 
ance the  foe  of  equitable  distribution  of  accident 
burdens  among  employers,  militate  against  the 
adoption  by  rival  liability  companies  of  any  rational 
policy  of  accident  prevention. 

The  fact  that  private  insurance  is  discredited  as 
a  force  for  reducing  accidents  does  not,  however, 
point  to  state  insurance  as  the  only  solution.  Some 
doubt  may  well  be  felt  as  to  the  comparative  merits 
of  the  compulsory  trade  mutual  and  the  state  mo- 
nopoly in  this  respect;  and  one  able  writer  favors 
the  former  as  a  practical  agency  for  furthering  the 
cause  of  accident  prevention.  This  authority  gives 
as  his  reasons  that  the  members  of  a  compulsory 
trade  mutual  have  the  knowledge  of  trade  condi- 
tions necessary  to  draft  proper  standards ;  that  the 
association  itself  is  under  no  competitive  pressure 
either  to  lower  the  standards  or  to  remit  the  penal- 
ties for  non-compliance;  and  that  the  difficulty  ex- 
perienced by  an  insurance  carrier  covering  diverse 
industries,  in  that  one  particular  employing  group 
is  constantly  besieging  the  carrier  to  tone  down  the 
safety  standards  and  reduce  the  schedule  charges 
in  order  to  obtain  a  differential  advantage  in  basic 
rates  or  in  merit  rating,  is  done  away  with  where 


INSURANCE  FEATURES  173 

each  trade  has  its  own  mutual  insurance  association 
and  the  members  are  "collectively  and  inescapably 
responsible  for  the  accident  cost  therein."  This 
same  author  concedes,  however,  that  many  of  the 
advantages  of  the  trade  mutual  may  be  gained  by 
a  compulsory  state  fund  divided  into  industrial 
sections  with  a  collective  interest  and  a  technical 
relation  to  accident  insurance  like  the  German 
mutuals.55 

It  will,  we  think,  be  conceded  by  any  unbiased 
student  of  compensation  insurance,  that  fairness  to 
the  individual  employer  and  efficiency  in  accident 
prevention  can  only  be  obtained  by  charging  a  rate 
of  premium  based  on  the  zeal  or  success  of  the  em- 
ployer in  keeping  the  percentage  of  disabling  acci- 
dents to  his  workmen  at  a  low  ebb.  Merit  rating, 
however,  is  not  a  proposition  devoid  of  complica- 
tions. Rival  schools  exist  which  advance  radically 
different  theories.  Thus,  one  group  insists  that 
the  physical  character  of  the  individual  risk  should 
be  the  sole  criterion  of  the  rate  to  be  charged ;  while 
it  is  just  as  ardently  urged  on  the  other  hand  that 
the  loss  experience  for  a  given  risk  during  a  given 
period  should  be  subjected  to  detailed  analysis  and 
appraisal,  and  the  class  or  basic  rate  modified  in 

»«Mr.  Downey  in  24  Journ.  of  Pol.  Econ.,  pp.  975-976  (Dec.  1917). 


174      WORKMEN'S  COMPENSATION  AND  INSURANCE 

accordance  with  this  experience.  The  first  of  these 
systems  is  called  "schedule  rating";  the  other  is 
known  as  "experience  rating."  50 

Where  the  former  scheme  is  in  force,  the  under- 
writers depend  upon  a  "schedule,"  in  which  a  com- 
plete analysis  of  the  average  manufacturing  plant 
and  the  normal  items  of  hazard  productive  of  indus- 
trial accidents  is  made,  covering,  among  other 
things,  the  type  of  building  construction,  existing 
facilities  for  safety  of  employees  against  fire  and 
panic  hazard,  the  condition  of  floors,  hoistways, 
stairs,  boilers,  etc.  Standard  methods  of  safe- 
guarding machinery  and  equipment,  of  instructing 
employees  in  accident  prevention,  and  of  improving 
the  sanitary  condition  of  the  premises,  are  also  out- 
lined in  the  schedule.  With  proper  allowances  for 
catastrophe  hazard  and  peculiar  risks  in  a  given 
industry,  the  individual  employer's  establishment  is 
then  compared  to  the  average  or  "schedule"  plant, 
and  the  premium  rate  set  higher  or  lower  as  the 
existence  or  absence  of  unusually  dangerous  condi- 
tions is  established.  The  employer's  direct  pecun- 
iary interest  in  the  installation  of  safety  devices  is 
thus  made  apparent.57 

68  Leon  S.  Senior  in  The  Annals,  vol.  LXX,  pp.  264,  269  (March, 
1917). 

07  Ibid.,  pp.  264-265. 


INSURANCE  FEATURES  175 

"Experience  rating"  is  what  its  name  indicates. 
The  loss  experience  of  the  employer  for  a  given 
period  is  subjected  to  analysis,  and  the  rate  of 
premium  modified  in  accordance  therewith.  On 
behalf  of  this  system  it  is  urged  that  schedule  rating 
can  only  take  account  of  the  physical  conditions  of 
the  risk,  and  that  moral  conditions  which  account 
for  high  accident  rates  in  some  plants  whose  physi- 
cal attributes  are  ideal,  can  only  be  covered  by  a 
rating  based  on  actual  results.  It  is  also  stated 
that  schedules  have  not  been  sufficiently  developed 
to  take  care  of  other  than  manufacturing  risks.58 
Nevertheless,  the  balance  of  expert  opinion  seems 
to  be  in  favor  of  accident  rating;  and  the  reasons 
are  given  by  Mr.  Downey: 

"Experience  rating  provides  a  certain  incentive 
to  accident  prevention  because  it  makes  the  estab- 
lishment rate  depend  in  part  upon  the  number  and 
severity  of  injuries  actually  sustained  in  that  estab- 
lishment during  a  given  period,  but  it  furnishes  no 
guidance  in  methods  of  prevention,  which  often  is 
the  larger  half  of  the  problem.  Schedule  rating 
combines  incentive  with  instruction;  it  provides 
definite  standards  of  mechanical  safeguarding, 
working  methods,  and  (most  important  of  all)  the 

88  Ibid.,  p.  269. 


176      WORKMEN'S  COMPENSATION  AND  INSURANCE 

education  of  workmen  in  'safety  first,'  while  at  the 
same  time  it  penalizes  unsafe  conditions  and  prac- 
tices." 59 

There  are  two  methods  of  insuring  compensation 
which  must  be  mentioned  here,  because  they  have 
received  legislative  sanction  in  some  States,  though 
neither  commends  itself  to  a  dispassionate  mind. 
These  are  self -insurance  and  reciprocal  or  inter- 
insurance.  The  former  has  been  summarily  dis- 
posed of  by  a  recent  writer  in  the  phrase  "Self- 
insurance  is  really  non-insurance";60  and  it  is  in- 
deed difficult  to  see  how  state  inspection  of  com- 
pensation carriers  can  be  effectively  administered, 
when  each  employer  may  be  his  own  insurer.  Re- 
ciprocal insurance,  managed  through  an  attorney- 
in-fact  who  is  really  an  irresponsible  middleman, 
has  secured  remarkable  privileges  from  some  legis- 
latures ;  but  it  is  a  speculative  and  hazardous  under- 
taking, often  tainted  with  fraud,  with  nothing  to 
recommend  it  as  a  method  of  securing  compensa- 
tion awards,  and  has  been  twice  doubly  damned  by 
competent  authorities.61 

6924  Journal  of  Pol.  Econ.,  pp.  973-974  (Dec.  1916). 

eoHarwood  E.  Ryan  in  The  Annals,  vol.  LXX,  p.  251  (March, 
1917). 

8i  See  pamphlet  on  "Liability  and  Compensation  Insurance  on  the 
Reciprocal  or  Inter-Insurance  Plan"  by  P.  T.  Sherman;  Ryan  (su- 
pra), p.  252. 


INSURANCE  FEATURES  177 

Although  this  chapter  has  been  chiefly  devoted 
to  an  attempt  to  establish  the  superiority  of  com- 
pulsory state-managed  insurance  over  all  other 
methods  of  securing  the  compensation  award,  there 
is  no  gainsaying  the  fact  that  the  adoption  of  a 
strict  state  insurance  law  in  one  of  our  forty-odd 
commonwealths  will  be  productive  of  hardships  so 
long  as  neighboring  states  refuse  to  take  similar 
action.  The  increased  cost  of  doing  business  which 
adequate  provision  for  one's  employees  entails, 
must  be  shifted  to  the  consumer ;  and  what  guaran- 
tee has  the  employer  that  his  customers  will  not 
refuse  to  pay  the  advance  in  price  of  the  commod- 
ity which  he  produces,  and  buy  outside  of  the  state 
from  manufacturers  not  troubled  by  rising  costs 
due  to  superimposed  ideals  of  social  justice?62 
The  problem  is  a  very  real  one ;  but  its  solution  lies 
not  in  abandoning  progressive  legislation,  but  in 
securing  its  uniform  enactment,  and  thus  prevent- 
ing the  shirker  from  profiting  by  his  disregard  of 
the  obligations  he  owes  the  community. 

•2  Gephart,  Insurance  and  the  State,  pp.  191,  201-202. 


CHAPTER  VI 
HOW  IT  WORKS  IN  NEW  JERSEY 

THE  first  of  our  States  to  have  in  full  operation  a 
permanent  workmen's  compensation  act  was  New 
Jersey.1  Approved  on  April  4,  1911,  this  interest- 
ing statute  went  into  effect  just  three  months  later; 
so  that  for  nearly  seven  years,  New  Jersey  has 
been  the  chosen  field  of  one  of  the  most  important 
legislative  experiments  which  this  country  has 
known.  It  is  due  to  this  fact  of  the  New  Jersey 
statute's  being  the  oldest  of  its  kind  in  the  United 
States,  and  hence  the  one  whose  merits  and  demerits 
have  been  submitted  to  the  most  searching  tests  of 
experience,  that  it  has  been  selected  for  particular 
study  here ;  though  its  own  interesting  and  typical 
provisions  would  of  themselves  entitle  it  to  the  dis- 
tinction of  separate  treatment. 

i  American  Labor  Legislation  Review,  vol.  V,  p.  34  (March,  1915). 
See  also  New  Jersey  Law  Review,  vol.  I,  p.  45  (M'ay,  1915).  The 
compensation  law  of  Kansas. was  approved  March  14,  1911,  but  was 
not  made  effective  by  its  terms  until  Jan.  1,  1912;  while  the  New 
Jersey  act  went  into  operation  on  July  4,  1911.  The  Nevada  act, 
which  by  its  terms  was  to  go  into  operation  July  1,  1911,  has  been 
entirely  superseded  by  a  statute  of  1913.  See  Bulletin  of  the  U.  S. 
Bureau  of  Labor  Statistics,  No.  126,  p.  313,  and  chart,  p.  48;  Report 
of  Workmen's  Compensation  Aid  Bureau  of  New  Jersey,  1916,  p.  9. 

178 


HOW  IT  WORKS  IN  NEW  JERSEY  179 

The  adoption  of  workmen's  compensation  by 
New  Jersey  followed  close  on  the  heels  of  a  legisla- 
tive attempt  to  deal  with  the  industrial  problem  by 
"an  act  to  extend  and  regulate  the  liability  of  em- 
ployers for  injury  or  death  to  employees  in  cer- 
tain cases."  2  This  statute,  passed  in  1909,  had  ex- 
pressly affirmed  the  doctrine  of  assumption  of  risk, 
and  had  made  "the  exercise  of  reasonable  care  at 
the  time"  by  the  employee  a  condition  precedent  of 
recovery.  Its  sole  advance  over  the  common-law  lay 
in  the  restrictions  which  it  imposed  on  the  operation 
of  the  fellow-servant  rule.  Where  injury  or  death 
of  an  employee  resulted  from  defects  in  machinery 
or  plant  due  to  the  negligence  of  the  employer  or 
his  servants,  or  by  reason  of  the  negligence  of  over- 
seers, or  of  any  person  in  the  employer's  service 
entrusted  with  the  control  of  any  signal,  switch, 
locomotive  engine,  or  train  upon  a  railroad — in 
these  few  cases  the  fellow-servant  rule  was  to  be 
relaxed,  and  its  availability  as  a  defense  to  the  em- 
ployer done  away  with.  There  could  be  no  more 
vivid  illustration  of  the  tenacity  of  the  old  system 
than  the  passage  of  so  conservative  a  law  at  so  late 
a  date  by  a  state  destined  to  be  one  of  the  leaders  in 
the  compensation  movement. 

2N.  J.  Laws  1909,  c.  85;  cited  Pamphlet  Laws  1909,  p.  114. 


180      WORKMEN'S  COMPENSATION  AND  INSURANCE 

In  the  two  following  years  the  first  experiments 
with  the  new  principle  were  made  in  the  United 
States.  But  when  the  New  Jersey  legislature  of 
1911  convened,  the  only  American  compensation 
acts  on  the  statute  books  were  those  of  New  York 
and  Montana,  both  soon  to  be  declared  unconstitu- 
tional by  the  courts.3  Indeed,  before  the  legisla- 
tion which  we  know  as  the  New  Jersey  Workmen's 
Compensation  Act  had  become  a  law,  the  New 
York  Court  of  Appeals  in  the  Ives  case  had  found 
the  compensation  law  of  that  state  invalid  as  in- 
fringing fundamental  constitutional  guarantees. 

Just  what  influence  the  Ives  case,  coming  so  close 
before  the  actual  passage  of  the  New  Jersey  act, 
had  on  the  drafting  of  that  statute  in  the  peculiar 
form  which  was  adopted,  it  is  impossible  to  say ;  but 
there  is  not  the  slightest  doubt  that  fear  of  the 
courts  influenced  the  legislature  in  its  choice  of  a 
system  at  least  nominally  optional.  It  was  plain 
that  a  judiciary,  however  jealous  of  constitutional 
rights,  would  not  have  the  same  reason  to  take  um- 
brage at  an  act  which  provided  by  its  terms  that  the 
parties  could  contract  out  of  it,  as  at  one  which  left 
to  those  affected  no  choice  in  the  matter.  Events 

a  Ives  v.  South  Buffalo  Ry.  Co.  (1911),  201  N.  Y.  271,  94  N.  E, 
431;  Cunningham  v.  Northwestern  Improvement  Co.  (1911),  44  Mont, 
180,  119  Pac.  554. 


HOW  IT  WORKS  IN  NEW  JERSEY  181 

proved  that  the  New  Jersey  law-makers  were  cor- 
rect in  this  assumption.4 

The  ingenious  scheme  which  was  employed  to 
take  the  New  Jersey  statute  out  of  the  class  of  com- 
pulsory acts,  was  the  framing  of  alternate  sections, 
under  one  or  the  other  of  which  every  contract  of 
employment  must  come.  If  the  parties  contract  in 
such  a  way  that  Section  I  may  be  applicable,  the 
employer's  liability  is  dependent  on  his  negligence. 
The  common-law  defenses  of  "fellow-servant's 
fault"  and  "assumption  of  risk"  are  abolished,  and 
only  willful  negligence  on  the  part  of  the  employee 
operates  as  a  bar  to  his  recovery  against  a  negligent 
master.  Section  I,  then,  leaves  the  common-law 
criterion — "whose  fault  was  it?" — in  full  force  and 
effect.  It  merely  destroys  certain  artificial  out- 
growths of  the  main  test,  and  is  strictly  an  em- 
ployer's liability  as  distinguished  from  a  workmen's 
compensation  provision. 

But  it  was  clearly  not  the  intention  of  the  f ramers 
that  any  considerable  number  of  contracts  of  hiring 
should  come  under  Section  I.  The  inclusion  of 
that  section  in  the  act  was  in  the  nature  of  a  "sop 
to  Cerberus,"  being  intended  rather  to  soften  the 

*  See   Sexton  v.   Newark  District  Telegraph  Co.    (1913),  86  Atl. 
(N.  J.)  451. 


182      WORKMEN'S  COMPENSATION  AND  INSURANCE 

transition  from  the  old  common-law  of  negligence 
to  the  new  system  that  practically  disregards  fault, 
than  to  furnish  a  permanent  method  of  seeking  rem- 
edies in  accident  cases.  Section  II  is  the  real 
workmen's  compensation  act  of  New  Jersey;  and 
the  clause  of  the  statute  which  has  made  it  appli- 
cable to  almost  all  employments  reads  as  follows : 5 

"Every  contract  of  hiring  made  subsequent  to  the 
time  provided  for  this  act  to  take  effect  shall  be  pre- 
sumed to  be  with  reference  to  the  provisions  of 
Section  II  of  this  act,  and  unless  there  be  as  part  of 
such  contract  an  express  statement  in  writing,  prior 
to  any  accident,  either  in  the  contract  itself  or  by 
written  notice  from  either  party  to  the  other, 
that  the  provisions  of  Section  II  of  this  act  are 
not  intended  to  apply,  then  it  shall  be  presumed 
that  the  parties  have  accepted  the  provisions  of 
Section  II  of  this  act  and  have  agreed  to  be  bound 
thereby.  In  the  employment  of  minors,  Section  II 
shall  be  presumed  to  apply  unless  the  notice  be 
given  by  or  to  the  parent  or  guardian  of  the  minor." 

Experience  has  shown  conclusively  that  the  em- 
ployers' liability  system  provided  by  Section  I  of 
the  New  Jersey  statute  cannot  compete  with  the 
workmen's  compensation  features  introduced  by 

•  N.  J.  Laws  1911,  c.  95,  par.  9;  cited  Pamphlet  Laws  1911,  p.  136. 


HOW  IT  WORKS  IN  NEW  JERSEY  183 

Section  II.  A  vast  number  of  contracts  of  em- 
ployment are  and  always  will  be  entered  into  by  the 
parties  in  ignorance  of  or  without  special  reference 
to  the  particular  bit  of  legislation  applicable;  and 
to  all  of  these  the  compensation  provisions  apply 
automatically.  Only  by  expressly  stipulating  that 
they  do  not  intend  to  be  bound  by  Section  II  can 
parties  avoid  such  a  result;  and  it  is  quite  obvious 
that  employers  who  will  find  their  common-law 
rights  greatly  curtailed  in  that  event  are  going  to  be 
very  unwilling  to  consent  to  such  an  arrangement. 
This  factor  was  judicially  recognized  in  one  of  the 
early  cases  in  which  the  act  was  construed,  the  Court 
saying:6 

"It  is  optional  with  the  master  and  servant 
whether  the  employment  shall  be  under  Section  II 
of  the  Act  or  not.  It  is  a  matter  of  common  knowl- 
edge that  in  this  regard  the  person  who  seeks  work 
is  at  rather  a  disadvantage,  for  unless  he  is  willing 
to  accept  employment  under  Section  II  of  the  Act 
he  will  have  a  very  small  opportunity  to  obtain 
any." 

But  the  best  proof  that  Section  I  has  been  gen- 
erally disregarded  is  the  indisputable  fact  that  prac- 

e  Kalisch,  J.,  in  Nitram  Co.  v.  Creagh,  86  AtL  (N.  J.)  435,  at  p. 
436. 


184      WORKMEN'S  COMPENSATION  AND  INSURANCE 

tically  no  actions  have  been  brought  under  it. 
Among  the  reported  cases  which  have  reached  the 
higher  courts  of  the  state  I  was  able  to  find  in  my 
early  researches  only  two7  in  which  it  was  at- 
tempted to  bring  the  contract  of  employment  under 
the  unpopular  section,  while  upwards  of  100  deci- 
sions had  been  handed  down  by  those  same  courts 
in  suits  brought  under  Section  II.  And  the  most 
reliable  statistics  show  that  the  proportion  of  the 
total  number  of  accidents  which  were  brought 
under  Section  I  by  election  of  either  employer  or 
employee  was  only  5.8%  in  1912,  5.3%  in  1913, 
4%  in  1914,  and  2%  in  1915.8 

The  State  of  New  Jersey,  then,  possesses  a  work- 
men's compensation  act  which,  though  nominally 
optional,  is  conceded  to  be  virtually  compulsory 
within  its  field.  In  this  respect  it  resembles  many 
of  the  American  statutes ;  for  "presumptions  of  ac- 
ceptance" have  frequently  been  resorted  to  by  wily 
legislators.9  As  a  typical  enactment,  therefore,  it 

7  Kennedy  v.  David  Kaufman  Sons  Co.,  91  Atl.  (N.  J.)  99;  Young 
v.  Sterling  Leather  Works,  96  Atl.  (N.  J.)  1016.  Even  in  the  Ken- 
nedy case  the  action  was  not  brought  originally  under  Section  I  of 
the  Compensation  Act,  but  under  the  Death  Act  of  1848  (2  Comp. 
Stat.  N.  J.  1910,  p.  1907). 

s  Reports  of  Employers'  Liability  Commission  of  New  Jersey,  1913, 
1914,  and  1915,  at  pages  7,  21,  and  7,  respectively. 

»  For  instance,  in  Alaska,  Colorado,  Connecticut,  Illinois,  Indiana, 
Iowa,  Kansas,  Louisiana,  Minnesota,  Nebraska,  Nevada,  Oregon, 


HOW  IT  WORKS  IN  NEW  JERSEY  185 

is  worthy  of  careful  study.  We  will  examine  its 
main  provisions  in  some  detail,  and  endeavor  to  as- 
certain how  far  those  provisions  have  proven  satis- 
factory in  actual  operation. 

(1)  Employments  covered.  The  New  Jersey 
Act  is  more  liberal  in  this  respect  than  any  other 
American  law.10  All  private  employments  are  cov- 
ered, except  casual  ones; ai  and,  since  1913,  all  pub- 
lic employments  except  elective  officials  or  at  sal- 
aries exceeding  $1,200  a  year.12  Farm  labor  and 
domestic  service,  which  for  one  reason  or  another 
most  legislatures  have  thought  it  proper  to  exclude 
from  the  operation  of  their  compensation  statutes, 
are  thus  subject  to  compensation  in  New  Jersey. 
The  innovation  has  not  been  continued  without  pro- 
test ;  but  bills  to  exclude  domestic  service  from  the 
act  have  so  far  failed  of  passage. 

The  importance  of  having  a  compensation  law 
extend  to  the  widest  possible  range  of  employments 
cannot  well  be  overestimated.  If  the  principle  is 
sound  from  an  economic  and  moral  point  of  view 

Pennsylvania,  Vermont,  Wisconsin,  and  perhaps  other  states.  See 
texts  of  statutes. 

10  That  is,  out  of  all  the  American  statutes  which  automatically 
include  employees,  without  the  necessity  of  any  act  of  election,  the 
most  extensive  group  is  so  included  under  the  New  Jersey  law. 

"P.  L.  1911,  p.  144,  being  Section  III,  par.  23,  of  the  original 
act,  as  amended  by  P.  L.  1913,  p.  311  (N.  J.  Laws  1913,  c.  174). 

12  P.  L.  1913,  p.  23  (N.  J.  Laws  1913,  c.  145). 


186      WORKMEN'S  COMPENSATION  AND  INSURANCE 

— and  the  preceding  pages  have  been  wasted  if  they 
have  not  demonstrated  beyond  all  cavil  that  it  is — 
there  is  no  reason,  in  justice  or  expediency,  for 
denying  its  benefits  to  any  wage-earner.  The  do- 
mestic servant  is  as  necessary  a  cog  in  our  compli- 
cated social  machinery  as  the  factory -worker;  the 
farmhand  performs  services  very  essential  to  the 
existence  of  the  community.  No  employments  are 
unproductive;  or  if  they  are,  the  public  which  cre- 
ates them  rather  than  the  workman  who  engages  in 
them  is  to  blame,  and  should  bear  the  burden  of 
accidents  sustained  therein. 

Though  the  New  Jersey  law  offends  less  than  any 
other  American  statute  against  the  views  just  ex- 
pressed, it  is  nevertheless  open  to  criticism.  The 
exclusion  of  casual  employees  from  its  benefits, 
though  supported  by  the  precedent  of  the  British 
Act  of  1906,  is  indefensible  in  principle,  and  unjust 
in  operation.  The  pernicious  nature  of  this  dis- 
tinction was  illustrated  by  the  well-known  case  of 
Joseph  C.  Gaynor,13  arising  under  the  Massachu- 
setts Compensation  law,  where  the  widow  of  a 
waiter  who  was  killed  by  an  accident  arising  out 
of  and  in  the  course  of  his  employment  was  de- 
is  Gaynor  v.  Standard  Accident  Ins.  Co.  (1914),  217  Mass.  86,  104 
N.  E.  339. 


HOW  IT  WORKS  IN  NEW  JERSEY  187 

nied  compensation  because  her  husband  had 
been  technically  a  casual  employee,  hired  by  the 
job,  though  his  employer  always  engaged  his  men 
that  way.  That  this  result  was  unjust,  and  that 
Gaynor's  widow  should  have  been  spared  the  pov- 
erty which  doubtless  descended  upon  her,  will  read- 
ily be  conceded ;  but  such  a  situation  is  not  uncom- 
mon where  the  rule  as  to  casual  employees  is  in 
effect. 

It  is  difficult  to  understand  what  reasons,  of  pub- 
lic policy  or  otherwise,  could  have  persuaded  the 
New  Jersey  legislature  to  create  the  other  two 
classes  of  exceptions  to  the  general  application  of 
the  act — elective  officials  and  public  employees  at 
salaries  exceeding  $1,200  a  year.  Perhaps  it  was 
felt  that  the  commonwealth  ought  to  be  spared  the 
additional  expense;  but,  as  an  able  writer  has 
pointed  out,  public  employees  should  be  included 
in  any  rational  compensation  scheme,  since  the  pub- 
lic ought  to  be  a  model  employer.14  Nor  does  the 
exclusion  of  officials  merely  because  they  receive  a 
salary  of  a  certain  size  commend  itself  to  the  crit- 
ical mind.  Such  a  man  striving  to  rear  and  educate 
a  family  on  $1,200  a  year,  will  suffer  just  as  much 

i*  Amer.  Econ.  Rev.,  vol.  V,  p.  240  (June,  1915) ;  Report  of  Work- 
men's Compensation  Aid  Bureau  of  New  Jersey,  1916,  p.  12. 


188      WORKMEN'S  COMPENSATION  AND  INSURANCE 

and  become  just  as  much  of  a  charge  on  the  com- 
munity as  his  less  highly  paid  brother.  Distinc- 
tions based  on  such  arbitrary  grounds  fail  to  take 
into  account  differences  in  the  standards  of  living, 
in  social  and  educational  demands,  which  make  the 
children  of  the  departmental  clerk  relatively  as 
helpless  as  the  family  of  the  injured  mill-hand. 
Starvation,  perhaps,  is  more  imminent  in  the  latter 
instance,  and  to  that  extent  the  need  for  compensa- 
tion is  more  imperative;  but  it  would  be  a  sadly 
ragged  scheme  which  stopped  at  the  extreme  cases, 
and  gave  no  relief  to  meritorious  public  servants  or 
their  dependents  simply  because  the  salaries  of  the 
injured  before  injury  were  sufficiently  large  to  give 
rise  to  the  presumption  that  the  families  were  in  no 
danger  of  immediate  relegation  to  the  bread-line. 

It  is  significant  that  all  attempts  further  to  re- 
strict the  employments  covered  by  the  Act  have  met 
with  failure.  The  Employers'  Liability  Commis- 
sion, appointed  to  observe  and  report  on  the  admin- 
istration of  the  law,  resolutely  set  its  face  against 
efforts  from  various  quarters  to  exclude  farm  labor- 
ers and  domestic  servants  in  1912  and  again  in 
1913; 15  basing  its  opposition  to  such  exclusion  on 

IB  Reports   of  New  Jersey   Employers'  Liability  Commission  for 
1913,  1914,  and  1915,  pages  4,  6,  and  3-4,  respectively. 


HOW  IT  WORKS  IN  NEW  JERSEY  189 

both  principle  and  expediency.  And,  despite  re- 
cent agitation,  it  seems  unlikely  that  there  will  be 
any  narrowing  of  the  statute  with  respect  to  em- 
ployments covered;  while  the  introduction  of  the 
compulsory  State  insurance  scheme  which  the  Com- 
mission has  persistently  recommended,  and  which 
is  inevitable,  will  in  all  probability  silence  the  pres- 
ent opposition  by  reducing  the  apparent  burden  on 
the  small  employer  to  the  insignificant  obligation 
of  the  payment  of  premiums. 

(2)  Occupational  Disease.  The  time-honored 
phrase  "accident  arising  out  of  and  in  the  course  of 
his  employment"  occurs  in  the  New  Jersey  law;  and 
in  construing  it  English  precedents  of  interpreta- 
tion have  been  closely  followed  16 — so  closely  that  a 
survey  of  the  general  subject  in  this  place  would  be 
a  mere  repetition  of  what  has  been  treated  earlier 
in  the  present  work.  The  problem  of  occupational 
disease,  however,  is  always  of  vital  interest,  and  the 
progress  along  those  lines  in  New  Jersey  is  worthy 
of  special  attention. 

Mr.  Holmwood,  in  the  preface  to  his  handbook 

is  See  Hulley  v.  Moosbrugger,  93  Atl.  (N.  J.)  79,  where  plaintiff 
had  been  injured  as  the  result  of  horseplay  indulged  in  by  other 
employees.  The  State  Supreme  Court  granted  compensation;  but 
on  appeal  this  was  reversed,  the  Court  of  Errors  and  Appeals  quot- 
ing English  cases  to  support  its  position  (95  Atl.  1007). 


190      WORKMEN'S  COMPENSATION  AND  INSURANCE 

on  the  New  Jersey  Act,  refers  to  occupational  dis- 
ease and  the  questions  to  which  it  gives  rise  as  the 
greatest  single  problem  for  the  courts  to  deal  with 
in  interpreting  the  law.17  But  it  would  be  difficult 
to  persuade  the  man  in  the  street  that  the  question 
is  one  properly  for  the  courts  at  all.  It  is  true  that 
high-minded  tribunals,  more  concerned  with  prac- 
tical justice  than  the  natural  and  accepted  mean- 
ings of  words,  have  in  a  few  instances  classed  rare 
occupational  diseases  as  "accidents,"  and  granted 
the  sufferers  compensation  on  that  basis ; 1S  but  to 
encourage  our  courts  in  thus  doing  violence  to  com- 
mon-sense would  be  folly  indeed.  New  Jersey, 
which  has  followed  English  precedents  so  much  in 
the  construction  and  interpretation  of  its  compen- 
sation law,  can  well  afford  to  indulge  in  further 
imitation  by  adding  to  its  present  act  a  schedule  of 
occupational  diseases  for  which  awards  will  be 
made  regardless  of  their  accidental  origin.  In 
England  such  a  schedule  was  added  to  the  act  of 
1906;  and  from  including  some  six  diseases  or 
groups  of  diseases  it  has  been  extended  to  cover 

17  Holmwood,  New  Jersey  Employers'  Liability  Law,  p.  4. 

isBrintons  y.  Turvey,  1905  App.  Cases  230  (anthrax);  Thompson 
v.  Ashington  Coal  Co.  (1901)  84  L.  T.  N.  S.  412  (blood-poisoning); 
Kelly  v.  Auchenlea  Coal  Co.,  (1910)  S.  C.  864  (pneumonia  from  in- 
haling gas  after  explosion). 


HOW  IT  WORKS  IN  NEW  JERSEY  191 

over  twenty -five,  on  successive  recommendations  of 
the  Secretary  of  State.19 

It  is  hardly  necessary  to  devote  space  here  to  jus- 
tifying the  policy  of  compensating  sufferers  from 
occupational  diseases.  Death  or  injury  by  acci- 
dent is  more  spectacular,  but  it  is  not  more  cer- 
tainly a  risk  of  the  employment.  As  one  writer  has 
said :  "Every  argument  which  can  be  brought  for- 
ward in  favor  of  compensation  for  industrial  acci- 
dents, which  is  now  acknowledged  to  be  humane, 
applies  with  equal  force  to  compensation  for  indus- 
trial diseases."  20 

The  practical  problems  involved  in  the  admin- 
istration of  a  compensation  act  covering  indus- 
trial diseases  as  well  as  accidents  are,  however, 
numerous  and  confusing.  As  the  present  Commis- 
sioner of  Labor  of  New  Jersey  has  pointed  out, 
in  a  very  able  discussion  of  the  subject,  physicians 
who  have  been  trained  to  recognize  symptoms  of 
diseases  peculiar  to  industrial  workers  are  very  rare, 
and  the  ascertainment  of  proper  cases  for  awards 
would  be  correspondingly  difficult.21  The  ques- 
tion, too,  of  what  diseases  should  be  reached  by  the 

i»  Report  of  N.  J.  Employers'  Liability  Commission,  1914,  pp.  12-< 
13. 

20  New  Jersey  Law  Review,  vol.  I,  p.  69  (May,  1915). 

21  Report  of  N.  J.  Employers'  Liability  Commission,  1914,  p.  17. 


192      WORKMEN'S  COMPENSATION  AND  INSURANCE 

compensation  law,  is  one  which  will  probably  have 
to  be  settled  by  a  compromise.22  On  principle, 
every  case  of  a  malady  traceable  directly  or  indi- 
rectly to  the  employment  should  be  compensated. 
But,  unless  we  are  to  follow  the  Germans  in  frankly 
accepting  invalidity  insurance,  such  an  inclusive 
program  is  practically  impossible.  To  ascertain 
the  facts  alone  in  individual  cases ;  to  make  sure  that 
a  cough  was  contracted  in  a  draughty  work-room 
rather  than  on  a  midnight  spree ;  would  require  in- 
calculable labor  and  expense,  and  the  results  would 
be  doubtfully  accurate  at  best.  If  we  are  to  confine 
our  awards  to  cases  where  the  injury,  be  it  accident 
or  disease,  can  be  said  to  arise  "out  of  and  in  the 
course  of  the  employment,"  the  best  we  can  do  is 
to  guarantee  compensation  in  the  case  of  diseases 
like  lead-poisoning,  for  which  the  employment  itself 
is  obviously  to  blame. 

It  has  been  stated  on  reliable  authority  that  there 
are  in  use  in  the  factories  of  New  Jersey  nearly 
fifty  industrial  poisons  capable  of  producing  seri- 
ous and  even  fatal  disease.23  In  the  hatting, 
pottery  and  smelting  industries  of  the  state  in 
particular  there  are  a  great  number  of  cases  of 

22  Ibid.,  p.  19   (Letter  from  State  Comissioner  of  Labor  Lewis  T. 
Bryant  to  the  chairman  of  the  Employers'  Liability  Commission). 

23  Report  of  N.  J.  Employers'  Liability  Commission,  1914,  p.  18. 


HOW  IT  WORKS  IN  NEW  JERSEY  193 

disability  which  are  due  directly  to  the  occupation.24 
Though  the  New  Jersey  legislature  has  passed  a 
number  of  acts  compelling  the  use  of  safety  and 
sanitary  appliances  in  factories  where  these  dan- 
gers are  incurred,  none  of  the  diseases  themselves 
have  been  brought  within  the  purview  of  the  com- 
pensation statute.  The  omission  to  do  so  seems 
hardly  defensible  in  view  of  the  precedent  of  Great 
Britain  and  many  of  our  States,  and  especially 
when  we  take  into  account  the  fact  that  the  Em- 
ployers' Liability  Commission  appointed  to  observe 
the  workings  of  the  law  has  repeatedly  recom- 
mended the  passage  of  a  bill  making  provision  for 
awards  to  sufferers  from  specified  industrial  dis- 
eases. 

Though  the  conscience  of  the  legislature  does  not 
appear  to  have  been  sufficiently  awakened  to  make 
it  heed  the  call  for  action  on  the  question  of  com- 
pensation for  industrial  disease,  a  good  work  was 
done  by  the  Employers'  Liability  Commission, 
working  in  conjunction  with  the  Commissioner  of 
Labor,  in  framing  a  bill  which  is  recommended  for 
passage.  This  projected  bit  of  legislation  has  been 
drawn  with  a  nice  eye  for  the  practical  matters 

2*  New  Jersey  Law  Review,  vol.  I,  p.  68  (May,  1915);  American 
Labor  Legislation  Review,  vol.  V,  p.  77  (March,  1915). 


194      WORKMEN'S  COMPENSATION  AND  INSURANCE 

of  administration.  "Certifying  Physicians,"  ap- 
pointed by  the  State  Board  of  Medical  Examiners, 
are  to  make  the  necessary  examination  of  diseased 
employees,  and  issue  certificates  to  those  entitled  to 
compensation.  The  maladies  to  which  this  pro- 
posed act  applies  are : 25 

1.  Anthrax. 

2.  Lead  poisoning  or  its  sequelae. 

3.  Mercury  poisoning  or  its  sequela?. 

4.  Phosphorus  poisoning  or  its  sequela?. 

5.  Arsenic  poisoning  or  its  sequelae. 

6.  Poison  by  nitro-  and  amido-derivatives  of  ben- 
zine. 

7.  Poison  by  carbon  bisulphide  or  its  sequelae. 

8.  Poison  by  nitrous  fumes  or  its  sequelae. 

9.  Chrome  ulceration  or  its  sequelae. 

10.  Eczematous  ulceration  of  the  skin  produced 
by  dust  or  liquids,  or  ulceration  of  the  mucous  mem- 
brane of  the  nose  or  mouth  produced  by  dust. 

11.  Compressed  air  illness  or  its  sequela?. 

12.  Telegraphists'  cramp. 

13.  Aniline  poisoning. 

14.  Wood  alcohol  poisoning. 

25  Report  of  the  N.  J.  Employers'  Liability  Commission,  1915,  pp. 
63-56.  The  proposed  statute  is  entitled  merely  "A  supplement  to" 
the  compensation  act  of  1911. 


HOW  IT  WORKS  IN  NEW  JERSEY  195 

While  by  no  means  a  complete  list  of  the  occupa- 
tional diseases  occurring  in  New  Jersey,  this  table 
probably  comprehends  the  most  prevalent  and  men- 
acing. It  would  form  a  splendid  foundation  on 
which,  as  experience  warranted,  a  more  ambitious 
structure  could  be  erected ;  and  it  is  to  be  hoped  that 
the  people  of  New  Jersey  will  soon  force  their  leg- 
islators to  adopt  this  excellent  scheme  which  their 
Commission  has  devised. 

(3)  The  Schedule  of  Awards.  Only  second  in 
importance  to  the  question  whether  any  awards  are 
to  be  made  at  all  is  the  amount  of  such  awards.  If 
workmen's  compensation  is  to  fulfill  its  destiny,  it 
must  do  more  than  proffer  a  scanty  alms  to  sufferers 
from  industrial  accidents.  It  must  provide  for 
them  and  their  families  substantially,  save  them 
from  the  degradation  of  the  poor-house  or  private 
charity,  and  maintain  them  on  a  level  higher  than 
that  of  mere  animal  existence.  The  unfortunate 
workman's  children  must  go  to  school,  be  properly 
clothed  and  fed,  be  trained  for  useful  citizenship. 
His  wife  or  widow  must  be  spared  the  cruel  hard- 
ships that  wither  women  before  their  time.  Nor 
is  such  a  law  the  vision  of  a  sociological  Utopia. 
It  is  possible  as  well  as  desirable ;  it  has  worked  and 
is  working  in  practical  communities. 


196      WORKMEN'S  COMPENSATION  AND  INSURANCE 

In  New  Jersey  an  elaborate  schedule  of  compen- 
sation awards  has  been  evolved  and  incorporated 
into  the  act  and  its  amendments.  To  say  that  it  is 
wholly  unsatisfactory  is  to  pass  too  harsh  a  criticism 
on  a  system  which  has  at  least  been  so  far  superior 
to  that  which  preceded  it  as  to  have  furnished  about 
three  and  one-half  times  as  much  compensation  to 
dependents  of  injured  workmen;26  but  its  de- 
fects are  many  and  obvious,  as  we  shall  proceed 
to  show. 

The  subject  of  awards  naturally  divides  itself 
into  three  heads :     (1)  awards  in  case  of  death ;  (2) 
awards  in  case  of  total  disability;  (3)  awards  in  case 
of  partial  disability.27 

When  a  workman  dies  as  the  result  of  an  injury 
by  an  accident  received  in  the  course  of  and  arising 
out  of  his  employment,  his  family  is  entitled,  under 
the  New  Jersey  law,  to  from  30  to  60  per  cent,  of  his 
wages  according  to  the  number  of  dependents,  sub- 
ject to  a  maximum  of  $10  and  a  minimum  of  $5  or 
full  wages  (if  such  are  under  $5)  weekly;  the  same 
to  be  paid  for  a  maximum  period  of  300  weeks.  In 
addition,  the  employer  must  defray  the  expenses  of 

2«  Bulletin  of  the  U.  S.  Bureau  of  Labor  Statistics,  Whole  No.  126, 
p.  116. 

2f  Ibid.,  p.  36. 


HOW  IT  WORKS  IN  NEW  JERSEY  197, 

last  sickness  and  burial,  the  latter  not  to  exceed 
$100.28 

Where  not  death  but  total  disability  occurs,  fifty 
per  cent,  of  the  weekly  wages  will  be  paid,  with  the 
same  maximum  and  minimum  of  $10  and  $5  or  full 
wages  (if  such  are  under  $5)  respectively;  the  max- 
imum period  is  300  weeks,  but  in  the  case  of 
permanent  total  disability  this  is  raised  to  400 
weeks.29 

For  partial  disability,  the  awards  are  of  course 
smaller,  being  fifty  per  cent,  of  the  weekly  wages 
for  periods  varying  according  to  the  nature  of  the 
injury.  The  maximum  period  during  which  com- 
pensation will  be  paid  even  for  permanent  partial 
disability  is  300  weeks ;  and  the  maximum  and  min- 
imum weekly  payments  are  as  before — $10  and  $5 
or  full  wages  (if  such  are  under  $5) .  For  loss  of 
certain  members  a  fixed  schedule  is  provided :  thus, 
for  loss  of  an  arm,  fifty  per  cent,  of  wages  during 
200  weeks ;  for  loss  of  an  eye,  fifty  per  cent,  of  wages 
during  100  weeks;  etc.30  Loss  of  "both  hands,  or 
both  arms,  or  both  feet,  or  both  legs,  or  both  eyes, 
or  of  any  two  thereof"  is  considered  as  constituting 

28  N.  J.  Laws  1911,  c.  95,  pars.  12  and  14 (a). 

29  Ibid.,  pars.  11  (a),  (b),  14(a). 
•olbid.,  pars.  ll(c),  14(a). 


198      WORKMEN'S  COMPENSATION  AND  INSURANCE 

total  and  permanent  disability,  and  is  compensated 
on  that  basis.31 

Compensation  in  no  case  begins  until  two  weeks 
after  injury,  at  the  end  of  the  so-called  "waiting  pe- 
riod." In  the  interval  the  employer  must  furnish 
reasonable  medical  and  surgical  aid,  unless  the  em- 
ployee refuses  it,  but  not  to  exceed  $50  in  value. 
When  compensation  begins,  this  obligation  ceases.32 

The  foregoing  brief  summary  of  the  present 
schedule  of  compensation  awards  in  New  Jersey 
will  be  sufficient  to  enable  us  to  understand  the  crit- 
icisms that  have  been  levelled  against  it.  The 
American  Association  for  Labor  Legislation 
opened  fire  on  it  three  years  ago  in  a  comprehen- 
sive arraignment  which  uncovered  the  many  weak 
spots. 

At  the  threshold,  the  provision  for  medical  at- 
tendance has  been  the  target  of  unfavorable  com- 
ment. The  fact  that  the  employee  must  accept  the 
physician  his  employer  provides,  and  that  that 
physician  is  apt  to  be  prejudiced  in  favor  of  the  man 
who  pays  his  fees  are  minor  objections;  a  much 
more  serious  matter  is  the  insufficiency  of  the  pro- 
vision itself.  $50,  or  two  weeks'  medical  attend- 
ance, is  often  not  enough  to  insure  the  early  re- 

ailbid.,  par.  11  (c).  «2  Ibid.,  par.  14. 


HOW  IT  WORKS  IN  NEW  JERSEY  199 

covery  of  the  injured  workman  and  his  return  to 
full  earning  capacity.  This  is  especially  true  in 
the  case  of  infection,  which  frequently  does  not  be- 
come serious  until  more  than  two  weeks  after  the 
original  accident;  and  it  is  true,  too,  in  the  many 
cases  where,  after  extended  treatment,  it  becomes 
apparent  that  an  operation  alone  will  reach  the  root 
of  the  trouble.33  In  such  instances  the  burden  is 
put,  very  unfairly,  on  the  injured  workman  and  his 
family.  That  a  more  liberal  provision,  such  as  rea- 
sonable medical  attendance  until  convalescence  is 
assured  and  special  attention  becomes  unnecessary, 
would  not  only  be  productive  of  greater  justice  but 
would  appreciably  lessen  the  death  and  disease  re- 
sulting from  lack  of  proper  care  of  the  injured, 
cannot  be  doubted.  It  is  a  tacit  recognition  of  this 
truth  that  the  State  Employers'  Liability  Commis- 
sion repeatedly  recommended,  among  other  propos- 
als for  legislation,  the  passage  of  a  "provision  for 
appeal  to  Court  for  additional  medical  services  in 
exceptional  cases."  34 

But  far  more  serious  than  the  problem  of  pro- 
viding  medical   attendance, — which,    after   all,   is 

ss  Amer.  Labor  Legislation  Review,  vol.  V,  pp.  64-^68  (March, 
1915)  ;  also  New  Jersey  Law  Review,  vol.  I,  pp.  63-64  (May,  1915), 

s*  Report  of  N.  J.  Employers'  Liability  Commission,  1914,  1915,  pp. 
8  and  4,  respectively. 


200      WORKMEN'S  COMPENSATION  AND  INSURANCE 

substantial,  though  not  always  sufficient,  under  the 
New  Jersey  act — are  the  limitations  arbitrarily  put 
on  the  amounts  awarded  as  compensation  to  in- 
jured employees  and  their  dependents.  That  the 
ever-alert  Employers'  Liability  Commission  was 
awake  to  this  defect  as  early  as  March  24,  1914, 
when  it  gave  as  its  opinion  that  "the  present  rates 
were  fixed  at  too  low  figures" ; 35  and  that  the  Com- 
mission has  consistently  recommended  the  substi- 
tution of  66%%  of  wages  as  a  basis  of  the  schedule 
instead  of  50%,  besides  a  general  increase  in  the 
schedules  themselves ; 36  these  facts  will  not  avail  the 
State  as  a  defense  to  the  criticisms  to  which  she  is 
subjected  for  her  low  schedule  of  awards,  in  view 
of  the  cool  disregard  of  the  Commission's  sugges- 
tions by  the  legislature.  Content  with  being  a  pio- 
neer state  in  compensation,  New  Jersey  has  clung 
to  the  statistical  basis  adopted  in  the  frankly  ex- 
perimental days,  and  still  deserves  the  sneer  of  the 
famous  expert  who  calls  the  minimum  weekly  pay- 
ment in  force  in  New  Jersey  and  other  common- 
wealths "rather  a  sorry  comment  upon  the  social 
conscience  of  States  proud  of  their  culture." 37 
In  truth,  the  limitations  with  which  the  scale  of 

«B  Report  for  1913,  p.  3. 

««  Report  for  1914,  pp.  7-8;  Report  for  1915,  p.  4. 

»T  Rubinow,  Social  Insurance,  p.  192. 


HOW  IT  WORKS  IN  NEW  JERSEY  201 

compensation  under  the  New  Jersey  Act  has  been 
hedged  about,  and  which  have  made  it  one  of  the 
lowest  in  the  country,38  are  not  of  the  sort  to  earn 
for  the  legislators  who  designed  them  a  high  place 
among  constructive  statesmen.  Take,  for  exam- 
ple, the  death  benefits,  which  vary  from  35%  of 
wages  for  one  person  dependent  to  60%  for  six  or 
more,  for  a  maximum  period  of  300  weeks.  In  case 
of  the  death  of  a  laborer  earning  $12  a  week,  with  a 
widow  and  six  dependent  minor  children,  for  in- 
stance, the  award  would  be  $7.20  a  week.  Such 
families  on  such  wages  as  $12  are  not  at  all  un- 
common ;  but  they  live  always  on  the  margin,  and  a 
sudden  reduction  in  family  income  like  the  fore- 
going would  spell  misery  if  not  starvation.  The 
inadequacy  of  death  benefits  is  constantly  being 
recognized  by  the  courts  in  granting  applications  to 
have  the  awards  commuted  to  a  lump  sum,  enabling 
the  survivors  at  least  for  a  time  to  keep  the  wolf 
from  the  door.39 

Compensation  for  total  disability  is  subject,  as 
we  have  shown,  to  a  weekly  maximum  of  $10  and 
a  minimum  of  $5.  That  it  is  often  impossible  for 
a  family  to  sustain  life  on  the  meager  allowance 

ssAmer.  Labor  Legislation  Review,  voL  V,  p.  64  (March,  1915). 
99  Ibid.,  p.  74, 


20-2      WORKMEN'S  COMPENSATION  AND  INSURANCE 

under  this  law,  to  say  nothing  of  enjoying  reason- 
able comforts,  has  been  proved  by  the  investiga- 
tions of  the  American  Association  for  Labor  Legis- 
lation. Frank  M.  earned  $12  a  week;  the  compen- 
sation to  which  he  was  entitled  after  his  injury,  $6, 
was  not  enough  even  to  pay  for  rent  and  food  for 
his  family  of  four.40  John  B.  was  totally  disabled 
for  five  months;  the  $6  a  week  awarded  to  him 
under  the  act  was  not  quite  enough  to  pay  for  rent, 
food,  and  a  fifty-cent  insurance  premium,  and  left 
no  margin  at  all  for  fuel,  light,  clothing,  and  other 
necessaries  for  himself  and  his  wife.  Cases  might 
be  multiplied ;  but  anyone  with  ordinary  experience 
in  purchasing  will  understand  at  once  that  to  expect 
a  family  to  live  on  such  a  pittance  as  is  provided 
by  the  "advanced"  New  Jersey  act  is  preposterous. 
While  in  the  case  of  death  and  total  disability  the 
extent  of  the  misfortune  makes  it  exceedingly  diffi- 
cult to  arrive  at  a  fair  estimate  of  the  compensation 
to  be  granted,  the  same  obstacles  do  not  confront  us 
in  the  case  of  injuries  resulting  in  partial  disability 
only.  The  normal  basis  of  compensation  in  such 
cases  is  the  estimated  loss  of  earning  power.41  Yet 
this  has  been  so  far  disregarded  in  New  Jersey  that 
a  schedule  of  awards  granting  so  much  for  loss  of 

*o  Ibid.,  p.  69.  *i  Ibid.,  p.  73. 


HOW  IT  WORKS  IN  NEW  JERSEY  203 

an  eye,  so  much  for  amputation  of  a  leg,  wholly 
without  reference  to  the  effect  on  earning  power, 
has  been  adopted;  a  system  which  has  been  said  to 
have  no  merit  save  that  of  originality.42  A  mo- 
ment's reflection  on  the  absurdity  of  granting  the 
same  compensation  for  loss  of  an  index  finger  to  a 
compositor  and  a  ditch-digger,  the  latter  of  whom 
may  suffer  no  loss  of  wage,  while  the  former  may 
be  compelled  to  seek  employment  at  a  greatly  re- 
duced remuneration,43  will  reveal  the  fundamental 
inequity  of  the  system. 

Our  stock  of  grievances  against  the  New  Jersey 
schedules  is  not  yet  exhausted.  The  limited  time 
during  which  payments  are  made,  especially  in  the 
case  of  so-called  permanent  partial  disability,  is 
lamentable  in  view  of  the  permanence  of  the  impair- 
ment of  earning  power.  Dr.  Rubinow  has  treated 
this  subject  with  biting  sarcasm  in  his  work  on 
"Social  Insurance."  Commenting  on  the  action  of 
the  United  States  Employers'  Liability  and  Work- 
men's Compensation  Commission  in  embodying  the 
feature  of  the  New  Jersey  law  under  discussion  in 
its  bill  for  compensation  of  employees  in  interstate 
commerce,  he  remarks: 44 

•*2  Rubinow,  Social  Insurance,  p.  194. 

«  See  footnote  39. 

4*  Rubinow,  Social  Insurance,  p.  195. 


204      WORKMEN'S  COMPENSATION  AND  INSURANCE 

"The  Commission  says:  'In  dealing  with  this 
class  of  injuries  the  law  should  be  so  framed  as  to 
say  to  the  injured  man,  "True,  you  have  lost  an 
arm,  and  for  a  considerable  period  of  time  (!)  it  will 
be  difficult  for  you  to  engage  in  the  labor  to  which 
you  have  been  accustomed,  or  to  acquire  the  ability 
to  do  other  work ;  but  one-armed  men  are  not  neces- 
sarily drones,  and  it  is  your  duty  to  become  a  self- 
supporting  member  of  society  as  soon  as  you  can 
do  so.  In  the  meantime  you  are  to  be  taken  care 
of."  It  is  difficult  to  characterize  this  sort  of 
argument  when  addressed  to  a  manual  laborer. 
Need  the  honorable  Commission  be  told  that  a 
one-armed  man  can  never  engage  in  the  labor  he 
has  been  accustomed  to,  and  that  while  one-armed 
men  are  not  necessarily  drones,  they  are  never  able 
(as  wage-workers)  to  earn  anything  like  the 
amount  they  had  been  earning  as  able-bodied  men, 
and  surely  not  to  support  a  family?" 

Not  long  ago  I  was  discussing  the  New  Jersey 
compensation  act  with  a  mechanic  employed  in  the 
Edison  Phonograph  Works.  "I  couldn't  possibly 
live  on  the  money  I'd  get  under  the  compensation 
act,"  he  said,  "even  though  I  have  no  family  except 
my  wife  to  support.  I  make  thirty  to  forty-five 
dollars  a  week;  if  I  were  laid  up,  I  would  only  get 


HOW  IT  WORKS  IN  NEW  JERSEY  205 

ten,  and  probably  most  of  that  would  go  to  the  doc- 
tors. But  it's  the  men  with  big  families  that  get 
hit  hardest." 

"What  percentage  of  a  man's  wages  do  you  think 
he  ought  to  get  in  case  he  is  laid  up  ?"  I  asked  him. 

"Seventy-five  per  cent.,"  he  answered  promptly. 
"And  that  means  seventy -five  per  cent,  of  what  he's 
earning,  with  no  ten-dollar  maximum." 

Not  unnaturally,  this  workingman  set  a  higher 
standard  of  payments  than  has  found  favor  with 
most  legislative  bodies,  who  are  perpetually  com- 
promising between  the  divergent  demands  of  cap- 
ital and  labor.  But  it  is  significant  that  he  did  not 
suggest  full  pay,  for  which  he  would  have  had  the 
precedent  of  the  old  Federal  compensation  act  of 
1908.  Perhaps  he  intuitively  knew  that  such  a  sys- 
tem was  demoralizing  and  tended  to  encourage 
malingering,  which  became  a  serious  problem  under 
the  Federal  act.45  But  the  temptation  to  malinger 
is  not  apt  to  be  very  strong  when  the  sick  benefits 
are  substantially  less  than  wages ;  and  so  a  seventy- 
five  per  cent,  basis  would  avoid  this  pitfall  and  yet 
furnish  compensation  at  least  roughly  adequate  in 
the  average  case. 

45  Bulletin  of  U.  S.  Bureau  of  Labor  Statistics,  Whole  No.  155,  p. 
80;  also  Journal  of  Political  Economy,  vol.  XXIII,  p.  809  (October, 
1915). 


206      WORKMEN'S  COMPENSATION  AND  INSURANCE 

It  is  obvious,  however,  that  a  system  as  inelastic 
as  that  suggested  by  my  chance  acquaintance  is  far 
from  the  ideal.  The  number  of  dependents  is 
taken  into  account  in  the  apportionment  of  death 
benefits  under  the  compensation  act  even  now ;  why, 
may  we  ask,  is  this  important  matter  wholly  over- 
looked when  the  employee  is  rendered  helpless  in- 
stead of  being  killed?  Because  he  has  a  right  to 
remain  single  and  be  the  sole  consumer  of  his  wages, 
says  the  individualist.  But  that  is  not  the  point. 
Industrial  accidents  create  social  problems ;  and  it  is 
the  purpose  of  a  rational  compensation  act  to  deal 
with  such  in  proportion  to  their  gravity.  The  in- 
jured workman  with  the  six  dependents  presents  a 
serious  problem ;  the  bachelor's  case  is  not  so  alarm- 
ing. The  matter  may  be  very  simply  stated ;  in  one 
case  there  are  seven  mouths  to  feed,  in  the  other 
only  one.  To  make  the  same  provision  for  both 
workmen  in  amiable  disregard  of  this  obvious  dis- 
tinction, is  to  be  guilty  of  unutterable  stupidity. 

It  is  not  my  purpose  to  frame  an  amendment  to 
the  New  Jersey  law  prescribing  a  new  and  adjusted 
scale  of  compensation.  That  is  a  matter  for  expe- 
rienced actuaries  to  handle;  the  criticism  indulged 
in  here  has  been  simply  destructive,  in  the  sense  that 
it  has  sought  to  demolish  the  artificial  and  hap- 


HOW  IT  WORKS  IN  NEW  JERSEY  207 

hazard  system  which  was  adopted  by  the  legislature 
at  a  time  when  American  experience  was  wanting, 
and  which  has  threatened  to  become  traditional.  I 
have  merely  sought  to  indicate  some  of  the  things 
which  must  be  taken  into  consideration  in  construct- 
ing a  proper  schedule  of  compensation — the  possi- 
bility of  living  on  the  awards  made ;  the  number  of 
dependents  of  the  recipient;  the  large  proportion 
of  all  awards  which  must  be  exhausted  under  the 
present  system  in  defraying  the  expenses  of  medical 
attention  alone;  etc.  Perhaps  already  a  prophet 
has  arisen  in  Israel  who  will  harmonize  these  and 
many  jarring  elements  into  an  epoch-making  sys- 
tem ;  who  will  achieve  that  rare  blend  of  practicabil- 
ity and  justice  which  the  legislative  idealist  always 
seeks  but  never  finds.46 

(4)  Insurance  Features.  Until  the  year  1917, 
New  Jersey  had  no  provision  for  insurance  of 
compensation  awards.  In  this  respect,  as  in  so 
many  others,  it  followed  British  precedent,  and  with 
unfortunate  results.  Suppose  such  a  case  as  this, 
for  example :  A  workman  in  a  small  tailoring  es- 

46  Some  idea  of  the  scientific  research  which  German  and  Russian 
compensation  experts  have  engaged  in,  in  the  effort  to  formulate 
proper  schedules  of  awards,  may  be  gained  by  reading  the  section 
on  "Amount  of  Compensation"  on  pp.  36-47  of  Bulletin  of  U.  S. 
Bureau  of  Labor  Statistics,  Whole  No.  126. 


208      WORKMEN'S  COMPENSATION  AND  INSURANCE 

tablishment  is  injured,  and  awarded  compensation 
for  100  weeks.  A  month  or  two  later  his  employer 
fails.  Until  the  recent  insurance  amendments,  the 
unfortunate  laborer  had  no  redress.  His  rights 
were  merely  personal  ones  against  his  employer,  and 
if  the  latter  was  unable  to  meet  his  obligations,  the 
injured  man  was  the  loser.  There  was  no  law  com- 
pelling the  employer  to  insure,  nor  to  provide  any 
security  for  the  sudden  demand  that  might  at  any 
time  be  made  on  him  by  the  death  or  serious  injury 
of  a  workman.  A  small  employer  might  easily  be 
ruined  by  being  forced  suddenly  to  pay  compensa- 
tion to  a  number  of  claimants  after  a  disaster  like  a 
fire,  the  explosion  of  a  boiler,  or  some  similar  acci- 
dent. It  is  true  that  a  sagacious  man  would  pro- 
vide against  such  calamities  by  insuring  his  work- 
men ;  but  men  love  to  take  a  chance,  and  so  long  as 
there  is  no  compulsion  exerted  hundreds  of  em- 
ployers will  continue  the  penny-wise,  pound-foolish 
policy  of  saving  on  premiums  and  trusting  to  Prov- 
idence that  no  accidents  will  occur.  If  such  em- 
ployers alone  were  to  suffer  thereby,  the  community 
might  well  afford  to  leave  them  to  their  own  folly; 
but  unfortunately  it  is  the  injured  workmen  who 
bear  the  brunt  of  such  mistakes  on  the  part  of  their 
superiors. 


HOW  IT  WORKS  IN  NEW  JERSEY  209 

If  the  financial  collapse  of  industrial  establish- 
ments were  a  rare  occurrence,  the  problem  pre- 
sented by  the  original  New  Jersey  law  to  which  I 
have  referred,  would  not  have  loomed  large  among 
compensation  questions.  But  the  complete  ship- 
wreck of  even  large  industrial  enterprises  is  a  hap- 
pening which  is  too  common  to  excite  even  passing 
interest.  In  1912  sixty-six  manufacturing  estab- 
lishments in  New  Jersey  closed  permanently.47 
The  mortality  among  small  employers,  particularly 
retail  dealers  with  two  or  three  employees,  is  tre- 
mendous, as  anyone  familiar  with  bankruptcy  court 
practice  will  testify.  In  some  lines  of  business,  as 
the  building  trades,  the  workmen  are  largely  em- 
ployed through  sub-contractors,  whose  financial  ir- 
responsibility makes  it  exceedingly  difficult  to  col- 
lect compensation  when  legally  due.48  If  we  add 
to  this  that  even  in  cases  where  an  employer  volun- 
tarily insured  his  employees,  the  latter  had  no  legal 
claim  to  the  insurance  money,  which  went  to  re- 
ceivers for  the  benefit  of  general  creditors,  in  the 
event  of  the  employer's  bankruptcy,  we  will  have 
no  difficulty  in  understanding  why,  in  1915,  com- 
pensation which  was  legally  due  was  not  paid  in 

47  Bureau  of  Statistics  of  New  Jersey,  36th  Annual  Report,  pp. 
258-259. 

48  Amer.  Labor  Legislation  Review,  vol.  V,  p.  63  (March,  1915). 


210      WORKMEN'S  COMPENSATION  AND  INSURANCE 

199  cases  of  non-fatal  accidents,  or  3.1%  of  the 
total;  and  in  21  cases,  or  12.4%  of  the  total  of  fatal 
accidents.49 

The  class  of  claimants  which  suffered  most  under 
the  New  Jersey  act  from  the  absence  of  insurance 
features  in  the  law  was,  of  course,  that  which  is  com- 
posed of  injured  workmen  or  their  dependents  to 
whom  awards  had  been  made  of  payments  continu- 
ing for  an  extended  period.  These  individuals,  it 
may  be  noted,  are  those  who  in  general  feel  the 
greatest  need  of  compensation;  among  them  are 
those  maimed  for  life,  the  minor  children  of  deceased 
laborers,  and  destitute  widows.  Under  the  system 
of  weekly  payments,  compensation  may  be  spread 
over  a  period  of  six  or  seven  years.  During  such 
a  period,  an  industrial  establishment  might  suffer 
many  reverses  of  fortune ;  it  might  fail  and  leave  the 
claimant  stranded,  with  but  a  fraction  of  the  legal 
compensation  paid.  The  injustice  of  such  a  situa- 
tion is  too  obvious  for  comment.50 

The  final  adoption  in  New  Jersey  in  1917  of  a 
system  under  which  insurance  or  some  other  secur- 
ity for  awards  is  required  of  employers,  was  far 
from  a  revolutionary  move.  On  the  contrary,  that 

«  Report  of  N.  J.  Employers'  Liability  Commission,  1915,  pp.  7-8. 
oo  See  ibid.,  pp.  32-40  inclusive,  in  which  the  Commission  strongly 
recommended  compulsory  State  Insurance. 


HOW  IT  WORKS  IN  NEW  JERSEY  211 

action  had  the  sanction  of  most  of  the  precedent  in 
the  United  States.  Of  the  thirty-eight  states  and 
three  territories  having  workmen's  compensation 
acts  in  force  at  the  present  writing,  nearly  three- 
fourths  require  insurance  or  proof  of  financial  re- 
.  sponsibility  on  the  part  of  employers  coming  under 
the  act  by  choice  or  otherwise;  and  in  most  of  the 
exceptional  states  the  principle  of  insurance  is 
recognized  to  the  extent  of  prescribing  regulations 
for  the  conduct  of  such  insurance  as  employers  may 
voluntarily  assume.  Only  in  Alaska  and  Arizona 
to-day  have  the  legislatures  been  so  blind  to  the 
practical  aspects  of  the  compensation  question  as 
to  make  no  provision  at  all  for  securing  awards.50a 
(5)  Administration  by  the  Courts.  What  were 
the  motives  which  led  the  legislature  that  passed  the 
act  of  1911  to  leave  the  administration  of  the  statute 
to  the  courts?  Conservatism,  perhaps,  which  trusts 
the  courts  above  all  other  human  agencies ;  possibly 
economy,  for  the  creation  of  a  special  machinery  to 
enforce  the  act  would  unquestionably  have  been  ex- 
pensive; or  it  may  have  been  that  a  Senate  and 

eoa  In  both  of  those  places,  an  employer  may  under  certain  circum- 
stances file  security  and  stay  judgment;  but  this  is  of  course  not 
"securing  compensation"  in  the  sense  of  the  text,  as  it  is  done  after 
the  injury.  Alaska  Laws  1915,  c.  71,  sees.  10-13;  Ariz.  Laws  1912 
(codified  by  Senate  Bill  No.  70,  Extra  Session  1913),  sec.  3173. 


212      WORKMEN'S  COMPENSATION  AND  INSURANCE 

Assembly  composed  so  largely  of  lawyers  regarded 
with  an  unfriendly  eye  any  scheme  which  would 
turn  over  to  administrative  commissions  or  officers 
cases  which  have  long  been  regarded  as  the  legiti- 
mate spoil  of  the  legal  profession.  Whatever  the 
influences  which  swayed  the  law-makers,  however, 
the  legislation  of  1911  is  not  in  harmony  with  pres- 
ent tendencies.  In  more  than  two-thirds  of  the 
compensation  states,  including  most  of  those  whose 
acts  have  been  passed  in  the  last  two  or  three  years, 
some  administrative  body — an  Industrial  Accident 
Board,  State  Insurance  Commission,  or  other  com- 
mittee of  officials — has  the  lion's  share  of  the  active 
authority.51 

Radical  changes  in  the  administrative  machinery 
of  the  New  Jersey  compensation  law  were  intro- 
duced by  the  legislature  of  1918.  To  the  new 
scheme  we  shall  presently  have  reference;  but  as 
this  chapter  is  primarily  a  review  of  New  Jersey 
experience,  the  merits  and  demerits  of  the  system 
hitherto  in  force  will  first  be  discussed.  Merely  ta 
say  that  the  New  Jersey  practice  did  not  conform 
with  the  usage  of  other  states  does  not,  to  my  mind, 
condemn  it.  The  popular  tendency  is  sometimes 
the  wrong  tendency.  It  will  be  worth  our  while 

"Report  of  N.  J.  Employers'  Liability  Commission,  1914,  p.  42. 


HOW  IT  WORKS  IN  NEW  JERSEY  21$ 

to  weigh  the  advantages  and  demerits  of  the  method 
of  court  administration,  as  presented  by  the  re- 
spective champions  of  the  court  and  commission 
systems,  before  passing  judgment. 

When  a  workman  was  injured  in  New  Jersey  by 
an  accident  arising  out  of  and  in  the  course  of  his 
employment,  there  was  first  an  attempt  at  an  ami- 
cable settlement.  In  the  vast  majority  of  cases 
this  was  successful ;  for  the  schedule  of  awards  had 
at  least  the  merit  of  being  definite,  and  the  extent 
of  the  liability  of  the  employer  was  generally  obvi- 
ous. In  cases  of  dispute,  the  matter  was  referred 
to  the  Court  of  Common  Pleas  of  the  county  in 
which  the  accident  occurred;  the  Judge  heard  the 
testimony  and  decided  in  a  summary  manner  on  the 
law  and  the  facts.  An  appeal  to  a  higher  tribunal 
could  be  taken  for  errors  of  law  only.52  The  pre- 
scribed compensation  according  to  the  schedules  of 
the  act  had  to  be  paid  if  the  employer  was  found 
liable  at  all ;  agreements  between  employer  and  em- 
ployee for  irregular  compensation  were  unenforce- 
able,53 and  a  Judge  who  awarded  more  or  less  than 
the  statute  allowed  was  acting  in  excess  of  his  pow- 
ers.54 Common  Pleas  Judges  were  authorized  to 

62  N.  J.  Laws  1911,  c.  95,  pars.  18,  19,  20. 

53  Ibid.,  par.  20. 

B4  Ibid.    See  also  Report  of  N.  J.  Employers'  Liability  Commis- 


214      WORKMEN'S  COMPENSATION  AND  INSURANCE 

commute  awards  to  lump  payments  when  such  ac- 
tion seemed  advisable.55 

Such  was  the  system  of  "court  administration"  in 
force  in  New  Jersey  until  the  amendments  of  the 
current  year.  What  it  really  was  is  this:  a  system 
of  voluntary  adjustments,  with  the  courts  as  a  last 
resort  in  cases  of  dispute.  Cases  found  their  way  to 
the  Common  Pleas  either  (1)  because  of  non-agree- 
ment; (2)  because  of  non-payment;  (3)  upon  a 
petition  for  commutation  of  a  claim  to  a  lump  sum. 
It  has  been  estimated  that  more  than  half  of  them 
were  brought  in  for  the  last-named  purpose.56  So 
when  we  find  that  out  of  the  total  number  of  com- 
pensation cases  only  6.8%  found  their  way  to  the 
courts  in  1913,  6.6%  in  1914,  and  5.5%  in  1915,57 
one  of  the  common  criticisms  of  the  New  Jersey 
act — that  it  encouraged  litigation,  the  very  thing 
a  compensation  act  should  be  framed  to  avoid — 
seemed  hardly  warranted  by  the  facts. 

The  most  comprehensive  indictment  of  the  court 
method  is  that  framed  by  the  American  Association 
for  Labor  Legislation  in  its  report  of  Three  Years 

sion,  1915,  p.  10,  where  this  comment  is  made  on  a  case:  "Court  re- 
fused compensation,  doing  something  strictly  forbidden." 

OB  N.  J.  Laws  1911,  c.  95,  par.  21. 

•«  Amer.  Labor  Legislation  Review,  vol.  V,  p.  40  (March,  1915). 

»7  Report  of  N.  J.  Employers'  Liability  Commission,  1913,  1914, 
1915,  pp.  9,  31,  and  27,  respectively. 


HOW  IT  WORKS  IN  NEW  JERSEY  215 

under  the  New  Jersey  Workmen's  Compensation 
Law,  published  in  March,  1915.  The  very  figures 
I  have  just  quoted  are  cited  by  the  ingenious  com- 
pilers to  show,  not  that  peaceful  and  equitable  set- 
tlements are  the  rule,  but  that  workmen  whose 
claims  have  been  improperly  adjusted  kept  away 
from  the  courts  because  of  delay  and  expense,  fear 
of  and  unfamiliarity  with  their  procedure,  and  the 
advantage  which  the  wealthy  employer  had  in  those 
tribunals.  "As  a  result,"  it  is  said,  "there  was  no 
supervising  authority  to  see  that  the  vast  majority 
of  claims  were  properly  adjusted" — a  conclusion 
which  is  undeniable,  but  which  did  not  entail  such 
hardship  on  the  injured  employee  as  is  implied;  for 
he  could  always  go  into  court  and  recover  the  bal- 
ance due  him,  and  often  did  so,  as  some  of  the  very 
cases  cited  by  the  Association  show.58 

The  opponents  of  the  court  method  have  grouped 
their  objections  to  the  system  under  three  heads: 
(1)  The  delay  of  court  procedure;  (2)  The  cost  of 
court  procedure;  (3)  The  unfitness  of  courts  for 
the  settlement  of  compensation  claims.59  As  sta- 
tistics and  instances  have  in  each  case  been  brought 
forth  in  support  of  the  contentions,  the  whole  con- 

68  Amer.   Labor   Legislation   Review,   voL   V.   pp.   58-61    (March, 
1915). 

«» Ibid.,  p.  40. 


216      WORKMEN'S  COMPENSATION  AND  INSURANCE 

stitutes  an  interesting  critique  of  the  act  of  1911 
which  is  worthy  of  discussion  here. 

The  most  important  of  the  three  alleged  de- 
fects appears  to  be  that  of  delay.  In  most  cases, 
as  we  have  seen,  awards  have  been  made  amica- 
bly by  the  employer  on  determining  the  nature 
and  extent  of  the  injury;  but  there  were  enough  in- 
stances in  which  no  voluntary  settlement  could  be 
reached  to  keep  the  courts  busy.  An  examination 
by  one  investigator  of  72  cases  of  fatal  injuries 
taken  to  the  courts  during  the  year  1913  showed  that 
the  average  time  elapsing  between  the  date  of  the 
accident  and  the  date  of  the  award  was  twenty-seven 
and  a  half  weeks,  while  in  only  five  cases  had  any- 
thing been  paid  the  petitioner  before  the  award 
was  made.60  Among  232  non-fatal  cases  during 
1914,  the  average  time  elapsing  between  accident 
and  award  was  thirty-seven  weeks  and  one  day. 
The  period  of  delay  was  often  so  long  that  benefits 
were  not  paid  until  the  injured  workman  had  re- 
covered and  returned  to  work;  for  example,  of  53 
awards  for  temporary  total  disability  made  by  the 
courts  during  1913,  fifteen  were  for  disabilities 
which  had  already  ceased.61 

It  is  evident  that  this  constituted  a  very  real  prob- 

«o  Ibid.,  p.  41.  ei  ibid.,  p.  43. 


HOW  IT  WORKS  IN  NEW  JERSEY  217 

lem.  Relief  delayed  is  often  no  relief  at  all;  and 
where  the  injured  laborer  is  living  on  the  margin, 
the  long  delays  which  a  disputed  award  entails  may 
plunge  him  deep  into  debt  or  bring  him  to  actual 
starvation.  There  is  little  doubt  that  administra- 
tion by  a  commission  with  summary  powers,  which 
was  earnestly  advocated  by  the  minority  of  the 
Employers'  Liability  Commission,  in  one  of  its  re- 
ports,62 makes  for  improvement  in  this  respect. 
Whether  the  resulting  decisions  in  contested  cases 
are  as  just  and  able  or  not  is  a  question  on  which 
the  respective  champions  of  court  and  commission 
methods  differ. 

In  almost  all  cases  of  disputed  awards  under  the 
act  of  1911,  the  claimant  was  represented  in  court 
by  a  lawyer.63  This  has  been  criticized  as  entailing 
a  large  expenditure  on  the  petitioning  workman, 
and  lessening  the  compensation  recovered  by  a  dis- 
proportionately large  amount.  Yet  the  law  made 
every  effort  to  protect  the  employee  by  making 
the  attorney's  fees  subject  to  the  approval  of  the 
court ; 64  and,  though  in  exceptional  cases  a  ridicu- 

«2  Report  of  N.  J.  Employers'  Liability  Commission,  1914,  p.  48 
(minority  report  of  John  T.  Cosgrove  and  S.  Botterill,  the  two  mem- 
bers of  the  Commission  representing  Labor). 

63Amer.  Labor  Legislation  Review,  vol.  V,  p.  44  (March,  1915). 

«*N.  J.  Laws  1911,  c.  95,  par.  21. 


218      WORKMEN'S  COMPENSATION  AND  INSURANCE 

lously  large  proportion  of  the  award  was  eaten  up 
in  lawyers'  charges,  in  one  case  38 %,65  in  the  vast 
majority  of  instances  this  item  was  not  a  large  one, 
the  average,  according  to  the  figures  of  1915,  being 
roughly  5.7%  of  the  total  compensation  awarded.66 
Perhaps  the  worst  thing  that  can  be  said  of  the  cost 
of  litigation  is  that  it  tends  to  keep  small  claims 
from  the  courts,  for  a  lawyer  cannot  afford  to  give 
his  time  for  the  three  or  four  days  which  may  be 
required  to  fight  a  case  when  the  fee  will  be  $10  or 
less.  And,  since  the  ordinary  workman  has  no 
money,  his  case  must  ordinarily  be  taken  on  a  con- 
tingent basis,  so  that  his  chances  of  getting  first- 
class  counsel  are  small  compared  with  the  employ- 
ers, who  are  prepared  to  pay  the  fees  in  any  event. 
The  so-called  "unfitness  of  the  courts  for  the  set- 
tlement of  compensation  claims"  has  been  made 
much  of  by  certain  critics.  A  joint  committee  of 
the  National  Civic  Federation  and  the  American 
Federation  of  Labor,  which  visited  the  various 
states  having  compensation  acts  in  operation  in 
1913  and  published  its  report  as  a  United  States 
Senate  document,67  calls  attention  to  the  fact  so 
often  commented  on  by  the  Employers'  Liability 

«5  Amer.  Labor  Legislation  Review,  vol.  V,  p.  45  (March,  1915). 
««  Report  of  N.  J.  Employers'  Liability  Commission,  1915,  p.  28. 
ei  No.  419,  63d  Congress,  2d  Session. 


HOW  IT  WORKS  IN  NEW  JERSEY  219 

Commission  of  the  large  number  of  cases  not  re- 
ported in  New  Jersey,  and  says:  "From  informa- 
tion received  by  this  Commission,  it  seems  probable 
that  not  over  60  per  cent,  of  the  amounts  payable 
under  the  New  Jersey  statute  are  being  paid.  The 
opportunity  for  fraud  exists,  fraud  that  is  difficult 
to  detect.  This  condition  could  not  exist  in  a  State 
having  an  industrial  accident  board  with  power  to 
approve  all  settlements  and  follow  up  the  payments 
and  see  that  they  are  made  in  full."  The  conclu- 
sion of  the  American  Association  is  similar:  "Ob- 
servation of  the  settlement  of  claims  through  the 
court  seems  to  show  that  their  very  nature  tends 
to  make  them  unfit  for  the  settlement  of  compensa- 
tion cases."  88  The  two  labor  members  of  the  New 
Jersey  Employers'  Liability  Commission,  in  their 
minority  report  submitted  in  1914,  take  the  same 
view:  "We  are  convinced  as  a  result  of  close  ob- 
servation and  long  and  careful  consideration  of  the 
subject  that  it  is  a  mistake  to  place  the  administra- 
tion of  a  workmen's  compensation  law  in  the  hands 
of  the  courts.  We  are  of  the  opinion  that  adminis- 
tration through  a  commission  of  three  paid  mem- 
bers, with  summary  powers,  would  prove  to  be  more 
satisfactory  because  more  efficient,  and  that  such 

r.  Labor  Legislation  Review,  vol.  V,  p.  47  (March,  1915). 


220      WORKMEN'S  COMPENSATION  AND  INSURANCE 

administration  would  be  most  truly  economical  in 
the  long  run."  69 

The  specific  objections  urged  to  show  the  unfit- 
ness  of  the  courts  for  compensation  settlements  are 
in  some  cases  worthy  of  careful  consideration.  For 
instance,  it  is  said  that  judges  have  usually  little 
knowledge  of  industrial  processes  and  neither  time 
nor  opportunity  to  become  specialists  in  compen- 
sation law.  The  answer  that  would  probably  be 
given  to  this  is  that  where  compensation  cases 
occupy  an  important  place  in  the  daily  business  of 
a  common  pleas  judge,  he  has  every  incentive  to 
familiarize  himself  with  all  the  aspects  of  the  prob- 
lem. If  such  a  functionary  had  only  occasionally 
to  do  with  this  branch  of  law,  the  objection  would 
be  serious;  but  the  reports  for  1915  showed  cases 
in  all  but  one  of  the  21  common  pleas  courts  in  the 
state,  and  in  Essex  and  Hudson,  the  two  most 
populous  counties,  o.ver  sixty  cases  apiece.70  In 
actual  practice,  though,  the  courts  do  not  seem  to 
have  justified  this  ideal  of  self -education ;  and  the 
American  Association  for  Labor  Legislation  pre- 
sents an  appalling  array  of  mistakes  due  to  mis- 
interpretation of  the  law  and  direct  transgression 

«»  Report  of  N.  J.  Employers'  Liability  Commission,  1914,  p.  41. 
*o  Report  of  N.  J.  Employers'  Liability  Commission,  1915,  p.  27. 


HOW  IT  WORKS  IN  NEW  JERSEY  221 

of  it.  Through  the  vigorous  intermediation  of  the 
Employers'  Liability  Commission  and  the  wisdom 
that  comes  only  with  experience,  these  mistakes 
have  been  vastly  reduced;  so  that,  while  207  cases 
of  irregular  or  faulty  compensation  were  reported 
for  1913,  and  169  in  1914,  there  were  in  1915  only 
27  such  irregularities 71 — a  very  small  number.  It 
is  doubtful  if  even  a  paid  and  expert  Commission 
could  greatly  improve  on  the  record  of  this  latter 
year,  especially  when  it  is  considered  that  the  27 
irregularities  were  some  of  them  of  a  trifling  na- 
ture; but  judges  shift  with  politics,  and  it  is  cer- 
tainly safer  in  the  long  run  to  have  trained  and 
tried  men  in  permanent  command  of  this  phase  of 
compensation  administration  than  to  leave  all  to  the 
chance  of  having  judicial  incumbents  of  the  requi- 
site experience  and  temperament. 

An  objection  to  the  court  method  of  administra- 
tion which  cannot  fail  to  strike  anyone  who  is  famil- 
iar with  the  operation  of  compensation  and  liabil- 
ity laws  is  the  fear  which  the  employee  often  feels 
that  a  court  appeal  will  cost  him  his  employment. 
Though  often  unfounded,  this  fear  is  undoubtedly 
inspired  in  many  instances  by  employers  or  their 
representatives,  and  cases  are  on  record  in  which  dis- 

7i  Ibid.,  p.  7. 


222      WORKMEN'S  COMPENSATION  AND  INSURANCE 

charge  has  actually  followed  on  an  injured  work- 
man's attempt  to  obtain  compensation  legally  due 
him.72  This  feature,  deplorable  in  the  cynical  com- 
ment on  human  nature  which  it  constitutes,  is  not, 
however,  a  weakness  peculiar  to  court-administered 
acts,  but  is  equally  present  in  all  compensation  and 
liability  laws  which  provide  for  direct  collection  of 
benefits  from  the  employer.  Whether  court,  com- 
mission, board,  or  single  official  is  to  hear  the  case 
and  decide  the  question  of  the  employer's  liability 
and  its  extent,  unscrupulous  employers  will  always 
be  eager  to  prevent  the  issues  from  ever  being  pre- 
sented for  determination,  and  will  use  that  silent  in- 
fluence which  the  lord  of  labor  always  has  over  those 
dependent  on  his  favor  for  their  jobs,  to  keep  the 
workingman  from  his  due.  There  is  only  one  ef- 
fective way  of  destroying  this  practice  utterly,  and 
that  is  by  forcing  the  employer  to  insure,  so  that 
when  compensation  is  to  be  paid  it  does  not  come 
directly  out  of  his  pocket,  but  affects  him  so  re- 
motely that  the  motive  for  impeding  the  course  of 
justice  is  gone. 

That  the  multiplicity  of  tribunals  in  New  Jer- 
sey in  which  workmen's  compensation  cases  might 
be  tried,  and  may  still  be  tried  on  appeal  under 

"Amer.  Labor  Legislation  Review,  vol.  V,  p.  56  (March,  1915). 


HOW  IT  WORKS  IN  NEW  JERSEY  22S 

the  amendment  of  1918,  tends  to  create  confusion 
through  conflict  of  judicial  decision,  is  undoubtedly 
true.  There  are  twenty-one  common  pleas  courts 
in  New  Jersey,  one  for  each  county ;  and  unless  and 
until  points  of  interpretation  of  the  act  receive  au- 
thoritative attention  from  the  higher  tribunals  of 
the  State,  the  decisions  of  each  court  are  binding 
precedents  in  the  local  forum.  The  construction  of 
the  clause  stating  that  "every  contract  of  hiring 
made  subsequent  to  the  time  provided  for  the  act  to 
take  effect"  is  presumed  to  come  under  the  act,  is  a 
shining  example  of  the  conflict  of  judicial  decisions 
resulting  from  the  system.  Some  courts  held  that 
the  law  applied  only  in  case  the  contract  of  hiring 
was  entered  into  in  the  state;  others  were  equally 
emphatic  that  the  place  where  the  work  was  done, 
and  not  where  the  employment  contract  was  made, 
was  the  determining  question.73 

The  court  method  has  its  defenders.  For  the 
most  part  these  are  conservatives  who  resent  the  in- 
creasing intrusion  of  administrative  commissions 
into  the  field  of  judicial  activity.  Thus,  no  less 
an  authority  than  Mr.  Bradbury  has  characterized 
the  system  as  "entirely  adequate,"  and  goes  on  to 
say:  "So  far  as  the  disclosures  made  up  to  the 

73  Ibid.,  pp.  52-53. 


224,     WORKMEN'S  COMPENSATION  AND  INSURANCE 

present  time  are  concerned,  the  evil  which  is  to  be 
met,  does  not  seem  to  justify  the  elaborate  and  ex- 
pensive system  which  has  been  established  in  New 
York  to  meet  it.  As  employees  become  more  and 
more  familiar  with  the  law,  cases  of  inadequate 
payment  will  be  found  very  rare,  under  the  rule  in 
New  Jersey  where  any  agreement  can  be  examined 
and  set  aside  on  the  ground  merely  that  the  pay- 
ments are  not  as  great  as  the  statute  required."  74 
A  very  recent  amendment  to  the  New  Jersey 
compensation  act — Chapter  149  of  the  Laws  of 
1918 — creates  a  Workmen's  Compensation  Bu- 
reau. At  first  sight  this  new  body  seems  to  be  a 
counterpart  of  the  administrative  commissions  at 
work  in  so  many  states ;  but  an  examination  of  the 
statute  shows  that  the  curious  reluctance  of  the 
New  Jersey  legislature  to  abandon  the  court  sys- 
tem has  manifested  itself  in  an  awkward  compro- 
mise. Judges  of  the  Common  Pleas  may  still  take 
testimony  and  decide  cases,  though  only  after  the 
Bureau  has  failed  to  satisfy  the  parties.  The  de- 
tails of  this  remarkable  scheme  will  be  discussed  at 
the  close  of  this  chapter  under  the  heading  "The 
New  Administrative  Machinery" ;  but  before  pass- 

74  Bradbury,  Workmen's  Compensation  and  State  Insurance  Law 
<2d  Ed.),  p.  794. 


HOW  IT  WORKS  IN  NEW  JERSEY  225 

ing  to  this  topic  it  will  be  instructive  to  study  two 
earlier  creations  of  the  legislature — the  Employers' 
Liability  Commission  and  the  Workmen's  Compen- 
sation Aid  Bureau. 

(6)  The  "Commission"  and  the  "Bureau" 
Though,  as  we  have  shown,  no  official  machinery  for 
taking  the  administration  of  the  compensation  act 
out  of  the  hands  of  the  courts  was  attempted  to  be 
created  in  New  Jersey  prior  to  1918,  and  the  ex- 
ecutive work  devolved  upon  the  judicial  tribunals 
already  established  for  other  purposes,  two  auxil- 
iary bodies  were  created  at  different  times  by  stat- 
ute to  render  a  sort  of  unofficial  assistance  to  the 
ministers  of  justice.  The  first  of  these  was  the 
Employers'  Liability  Commission,  to  whose  activi- 
ties we  have  already  had  occasion  to  refer ;  and  the 
second,  which  took  the  place  of  the  Commission, 
was  the  Workmen's  Compensation  Aid  Bureau. 

The  Employers'  Liability  Commission,  to  be 
composed  of  "six  citizens,  at  least  two  of  whom  shall 
be  representatives  of  organized  labor,"  appointed 
by  the  Governor  and  serving  without  pay,  was 
created  in  1911,75  the  year  of  the  passage  of  the 
compensation  act  itself.  Its  duties  were  at  first 
vaguely  defined,  being  "to  observe  in  detail,  so  far 

«  N.  J.  Laws  1911,  c.  241. 


226      WORKMEN'S  COMPENSATION  AND  INSURANCE 

as  possible,  the  operations  throughout  the  State'* 
of  the  Workmen's  Compensation  law.  The  re- 
sults of  this  observation,  together  with  any  sugges- 
tions or  recommendations  which  the  Commission 
might  make,  were  to  be  embodied  in  an  annual  re- 
port. A  subsequent  statute,  passed  in  1912,  re- 
quiring employers,  insurance  companies,  etc.,  to 
make  reports  of  industrial  accidents  to  the  Commis- 
sioner of  Labor,  provided  that  the  Commission 
should  have  free  access  to  these  reports,  and  relieved 
it. of  the  obligation  of  duplicating  them;  and  an 
amending  act  was  also  passed  in  1913. 

The  actual  work  of  the  Employers'  Liability 
Commission  cannot  be  spoken  of  too  highly.  Its 
reports,  published  annually  up  to  1916,  con- 
tained the  careful  statistical  compilations  to  which 
every  student  of  the  New  Jersey  compensation 
act  must  turn  for  information.  Many  a  case 
which  threatened  to  develop  into  a  long  strug- 
gle in  the  courts,  with  expense  to  both  employer 
and  employed,  was  settled  amicably  through  the 
intervention  of  the  Commission.  Irregular  cases 
were  made  to  conform  with  the  law  through  cor- 
respondence; thus,  the  report  for  1915  contains  a 
list  of  57  such  irregularities  which  were  adjusted 
through  the  beneficent  action  of  the  Commission, 


HOW  IT  WORKS  IN  NEW  JERSEY  227 

and  13  cases  in  which  it  tried  and  failed.76  Besides 
this  eminently  practical  field  work,  the  members 
took  a  very  active  interest  in  the  drafting  of  legisla- 
tion to  remedy  some  of  the  defects  in  the  present  law 
which  we  have  pointed  out ;  and  in  this  the  Commis- 
sion as  a  whole,  and  the  two  labor  members  in  par- 
ticular, showed  themselves  progressive  and  sanely 
constructive.  Among  the  laws  recommended  in  the 
last  report  and  submitted  to  the  legislature  for  con- 
sideration were :  an  act  creating  a  Workmen's  Com- 
pensation Aid  Bureau  in  the  Department  of  Labor 
(which- was  passed  with  slight  changes  by  the  legis- 
lature of  1916)  ;  a  compulsory  insurance  act,  creat- 
ing also  a  State  Insurance  Fund ;  an  act  revising  the 
schedule  of  awards  on  a  66%%  basis,  and  providing 
for  more  thorough  medical  attention ;  and  an  act  in- 
cluding specified  occupational  diseases  among  the 
disabilities  for  which  compensation  is  payable.77 
The  minority  of  the  Commission,  being  the  two 
labor  members,  also  expressed  themselves  in  favor 
of  administration  by  a  paid  Commission  of  three 
members  with  summary  powers.78 

By  legislation  of  1916  the  mantle  of  Elijah  was 

7«  Report  of  N.  J.  Employers'  Liability  Commission,  1915,  pp.  20- 
83. 

if  Ibid.,  pp.  28-31,  32-40,  42-52,  53-56  inclusive. 

'«  Report  of  N.  J.  Employers'  Liability  Commission,  1914,  p.  48. 


228      WORKMEN'S  COMPENSATION  AND  INSURANCE 

made  to  descend  on  new  shoulders.  Though  not 
expressly  repealing  the  act  creating  the  Employ- 
ers' Liability  Commission,  the  statute  which  called 
into  being  the  Workmen's  Compensation  Aid  Bu- 
reau 79  made  that  intent  so  clear  in  its  delegation  of 
the  Commission's  powers  to  the  new  body,  and  its 
proviso  that  inconsistent  laws  are  "hereby  re- 
pealed," that  the  extinction  of  the  predecessor  may 
be  deemed  accomplished.  The  purposes  for  which 
the  Bureau  was  organized  were  briefly  stated  in  a 
letter  to  the  author  from  Mr.  W.  E.  Stubbs,  who 
acted  as  its  secretary,  as  he  had  of  the  Commission 
which  preceded  it.  He  wrote : 80 

"The  main  object  of  this  Bureau  is  to  review 
all  settlements  as  reported  by  employers  or  insur- 
ance carriers,  and  to  furnish  an  approval  to  both 
employer  and  employee,  if  the  settlement  is  found 
to  be  entirely  in  harmony  with  the  Statute,  and  fail- 
ing to  accomplish  this,  the  Bureau  is  authorized  to 
certify  a  state  of  facts  to  the  Court  of  Common 
Pleas,  which  Court  will  assign  counsel  to  represent 
the  injured  person,  and  in  the  event  of  an  award  in 
favor  of  the  employee,  this  counsel's  fee  may  be 
charged  against  the  employer,  who  is  without  legiti- 

19  N.  J.  Laws  1916,  c.  54. 

«o  Letter  dated  Trenton,  N.  J.,  July  26,  1916. 


HOW  IT  WORKS  IN  NEW  JERSEY  229 

mate  excuse  for  delay,  or  failure  to  pay  adequate 
compensation.  It  is  our  hope,  through  these  activi- 
ties, to  bring  about  a  satisfactory  administration  of 
the  compensation  law  in  this  State." 

Elsewhere  in  this  letter  Mr.  Stubbs  described  the 
make-up  of  the  Bureau:  "The  Workmen's  Com- 
pensation Aid  Bureau,  in  addition  to  the  Hon. 
Lewis  T.  Bryant,  Commissioner  of  Labor,  as  its 
head,  is  composed  of  Mr.  W.  E.  Stubbs,  Secretary, 
and  Messrs.  Geo.  J.  Jaeger  and  Harry  J.  Goas,  as 
referees,  appointed  for  the  purpose  of  visiting  vari- 
ous cities  on  stated  days,  in  order  to  render  aid 
wherever  same  may  be  of  service,  by  giving  advice 
to  employers  and  employees,  or  in  assisting  insur- 
ance companies  in  adjusting  matters  with  injured 
persons.  Anyone  desiring  information  can  secure 
same  from  the  representatives  without  charge." 

After  the  letter  from  which  I  have  just  quoted 
was  written,  the  Bureau  published  its  report  for 
the  year  1916.  In  a  later  communication  to  me, 
Mr.  Stubbs,  the  Secretary,  said  he  found  it  "neces- 
sary to  explain  that  owing  to  meagre  appropria- 
tions on  the  part  of  the  Legislature,  I  have  never 
been  able  to  carry  a  force  sufficient  to  enable  me 
to  do  many  things  which  are  accomplished  by 
[Bureaus  in  other  states.  One  of  these  is  the  pub* 


S30      WORKMEN'S  COMPENSATION  AND  INSURANCE 

lishing  of  decisions  of  the  courts,  and  other  matters 
pertaining  to  our  work,  which  would  be  of  interest 
to  the  general  public.  The  only  thing  which  has 
been  issued  is  the  annual  report  for  the  year 
1916."  81 

The  apology  seemed  hardly  needed.  The  Work- 
men's Compensation  Aid  Bureau  was  created  by 
act  of  March  15,  1916;  the  task  of  organizing, 
adopting  methods,  designing  of  blanks,  forms,  etc., 
and  enlightening  employers  and  the  general  pub- 
lic as  to  the  purpose  and  powers  of  the  Bureau,  had 
then  to  be  accomplished  before  effective  routine 
work  could  be  begun.  The  excellent  results  at- 
tained during  the  brief  remainder  of  the  year  were 
a  credit  to  the  members  of  the  Bureau,  and  quite 
overshadow  the  doubtful  disadvantage  which  the 
public  sustains  through  the  absence  of  the  volumi- 
nous reports  of  cases  and  other  literature  which 
state  commissions  take  such  universal  delight  in 
producing. 

The  legislative  recommendations  of  the  Bureau, 
like  those  of  its  predecessor,  the  Employers'  Liabil- 
ity Commission,  were  of  a  progressive  sort.  As  a 
study  of  the  Act,  and  the  making  of  suggestions  for 
its  improvement,  were  among  the  duties  with  which 

«  Letter  dated  Trenton,  N.  J.,  September  5,  1917. 


HOW  IT  WORKS  IN  NEW  JERSEY  231 

the  Bureau  was  specifically  charged  by  the  statute 
creating  it,  these  recommendations  are  especially 
significant.  Among  them  are:  a  reduction  of  the 
waiting  period  to  one  week ;  the  inclusion  within  the 
provisions  of  the  Act  of  state,  county,  municipal 
and  other  public  employees  receiving  salaries  in  ex- 
cess of  $1,200  a  year;  the  increase  of  compensation 
rates  to  sixty-six  and  two-thirds  per  cent,  of  wages, 
and  of  the  minimum  and  maximum  weekly  pay- 
ments to  $6  and  $12 ;  the  investing  of  authority  to 
make  actual  awards  in  controversies  in  the  Bureau's 
referees ;  compulsory  insurance  or  security  of  pay- 
ments (now  happily  secured  by  the  amendment  of 
1917)  ;  and  many  minor  alterations.82 

The  Bureau  took  up  the  work  of  reviewing  both 
fatal  and  non-fatal  cases  where  the  Employers' 
Liability  Commission  laid  it  down;  and  the  year 
1916  shows  a  substantial  increase  in  the  number  of 
successful  adjustments  made.  A  corresponding 
decrease  in  the  number  of  petitions  to  the  courts  is 
observable,  and  is  highly  creditable  to  the  Bureau, 
which  during  its  brief  existence  made  every  effort 
to  combat  the  vicious  effects  of  litigation  of  com- 
pensation claims.83 

82  Report  of  Workmen's  Compensation  Aid  Bureau,  1916,  pp.  6-12. 
»3  Ibid.,  p.  18. 


232      WORKMEN'S  COMPENSATION  AND  INSURANCE 

The  work  of  the  referees  was  perhaps  potentially 
the  most  important  of  all.  During  the  four  months 
of  July  to  October,  1916, 1049  individuals  appeared 
before  Messrs.  Jaeger  and  Goas,  information  and 
advice  were  given  in  262  cases,  118  cases  were  set- 
tled, and  132  hearings  granted.84  The  referees 
were  handicapped  by  lack  of  power  to  make  awards 
and  commutations,  the  method  of  certifying  dis- 
puted cases  to  the  Court  of  Common  Pleas  result- 
ing in  delays  and  dissatisfaction.  Another  need 
very  strongly  felt  was  that  of  the  services  of  a 
special  physician  for  the  Bureau,  to  assist  the  ref- 
erees in  cases  of  dispute  as  to  the  permanence  of 
injuries,  the  extent  of  particular  disabilities,  etc. 
Despite  imperfections  in  the  administrative  ma- 
chinery, however,  the  work  of  imparting  informa- 
tion, harmonizing  conflicting  interests,  hastening 
the  slow  course  of  justice,  and  saving  attorneys'  fees 
and  court  expenses  for  both  parties  to  controver- 
sies, went  on  very  satisfactorily  under  the  Bureau's 
direction. 

(7)  The  New  Administrative  Machinery.  We 
have  seen  that  the  comparative  merits  of  the  court 
and  commission  systems  have  been  the  subject  of 
heated  controversy  for  some  years.  It  might  have 

84  Ibid.,  pp.  19-20. 


HOW  IT  WORKS  IN  NEW  JERSEY  233 

been  supposed,  therefore,  that  one  scheme  or  the 
other  would  presently  triumph,  and  be  adopted  un- 
reservedly by  the  legislature.  Instead,  the  New 
Jersey  Assembly  of  1918  has  seen  fit  to  enact  into 
law  an  awkward  compromise  that  can  hardly  be  sat- 
isfactory to  either  faction,  and  preserves  the  faults 
of  both  rival  systems  so  meticulously  that  it  holds  a 
unique  place  among  legislative  acts. 

This  1918  provision,  which  is  in  the  form  of  an 
amendment  to  the  original  law  of  1911,  purports 
to  turn  over  to  a  Workmen's  Compensation  Bureau 
that  exclusive  original  jurisdiction  over  compensa- 
tion claims  which  was  exercised  by  the  Courts  of 
Common  Pleas.  This  provision,  however,  is  prac- 
tically nullified  by  a  further  clause  permitting 
either  party,  if  dissatisfied  with  the  findings  of  the 
Bureau,  to  appeal  the  judgment  to  that  very  Court 
of  Common  Pleas  which  is  elsewhere  deprived  of 
original  jurisdiction;  trial  on  appeal — and  this  is 
the  astounding  part — to  be  de  novo,  with  the  same 
right  to  produce  and  examine  witnesses  and  present 
other  testimony  that  existed  at  the  original  hearing. 

The  new  law  is  big  with  possibilities  of  discord 
and  confusion.  An  employer  unsuccessful  before 
the  Bureau  will  be  tempted  to  appeal,  and  by  some 
new  twist  of  the  evidence,  in  which  he  will  have  the 


234      WORKMEN'S  COMPENSATION  AND  INSURANCE 

advantage  because  of  his  ability  to  secure  the  serv- 
vices  of  expensive  counsel,  throw  his  opponent  out 
of  court.  On  the  other  hand,  because  of  the  power 
of  the  court  to  tax  costs  and  attorneys'  fees  on  the 
unsuccessful  party,  the  injured  employee  will 
ordinarily  be  afraid  to  appeal.  Discrepancies  will 
arise  between  the  evidence  before  the  Bureau  and 
the  evidence  in  the  new  trial,  and  time  will  be 
wasted  haggling  over  them.  Since  the  compensa- 
tion cases  before  the  Judges  of  Common  Pleas  will 
be  relatively  fewer,  the  danger  of  having  men 
charged  with  the  administration  of  compensation 
claims  who  are  unacquainted  with  industrial  condi- 
tions and  even  with  the  branch  of  law  to  which  the 
controversies  belong,  will  be  greatly  increased. 

What  the  New  Jersey  legislature  has  actually 
done  has  been,  not  to  turn  over  the  effective  admin- 
istration of  the  compensation  law  to  a  specially  ap- 
pointed commission,  but  to  give  some  color  of  legal 
sanction  to  what  is  essentially  a  system  of  volun- 
tary settlements — merely  to  extend,  in  short,  the 
sphere  of  influence  formerly  possessed  by  the 
Workmen's  Compensation  Aid  Bureau.  That 
body  was  empowered  to  pass  upon  the  validity  of 
agreements  for  compensation  entered  into  between 
the  parties,  and  to  initiate  proceedings  where  the 


HOW  IT  WORKS  IN  NEW  JERSEY  235 

injured  emploj'ee  or  his  dependents  neglected  to  do 
so;  and  all  that  is  added  in  the  creation  of  the  new 
Bureau  is  the  power  to  go  through  the  form  of  a 
trial  and  make  a  finding  which  the  parties  are  at 
liberty  to  disregard.  It  is  true  that  the  statute 
speaks  of  vesting  in  the  Bureau  jurisdiction  for- 
merly possessed  by  the  Courts  of  Common  Pleas, 
and  denominates  the  action  of  a  party  in  refusing 
to  concur  in  that  body's  conclusions  and  demand- 
ing a  judicial  hearing  an  "appeal."  Looking 
through  the  form  to  the  substance,  however,  it  will 
be  seen  that  the  original  jurisdiction  of  the  courts 
of  law  is  left  intact ;  and  the  only  substantial  change 
from  preexisting  methods  is  that  there  is  thrown 
upon  the  state  authorities,  in  every  instance  where 
a  party  chooses  to  make  trouble,  the  unnecessary 
burden  of  a  second  investigation  into  the  facts. 

The  details  of  the  new  scheme  are  not  of  espe- 
cial interest,  and  will  be  disposed  of  briefly.  The 
membership  of  the  Bureau  includes  the  Commis- 
sioner of  Labor,  three  deputy  commissioners,  and 
such  referees  or  other  employees  as  may,  in  the 
judgment  of  the  Commissioner,  be  necessary. 
(Sec.  1.)  Its  "exclusive  original  jurisdiction,"  so- 
called,  is  to  be  exercised  by  these  officials  "sitting 
individually  or  together."  (Sec.  3.)  An  agree- 


236      WORKMEN'S  COMPENSATION  AND  INSURANCE 

ment  between  the  injured  employee  and  his  em- 
ployer for  compensation  may  be  filed,  within 
twenty-one  days  after  the  accident,  with  the  Bureau, 
and  if  approved  by  it  becomes  binding  on  the  par- 
ties; where  there  is  a  failure  to  file  or  secure  ap- 
proval of  such  an  agreement,  the  Bureau  is  to  en- 
deavor to  bring  about  a  settlement  of  the  claim, 
filing  a  petition  on  its  own  initiative,  with  the  con- 
sent of  the  injured  workman  or  his  dependents, 
where  he  or  they  have  neglected  so  to  do.  ( Sec.  4. ) 
In  this  latter  case,  or  in  the  case  of  the  petition  be- 
ing filed  by  the  proper  party  within  one  year  from 
(1)  the  date  of  the  accident,  or  (2)  failure  of  the 
employer  to  pay  according  to  the  terms  of  an  agree- 
ment, or  (3)  last  payment  (where  one  or  more  pay- 
ments have  been  made),  a  time  is  to  be  fixed  for 
hearing  before  the  Commissioner  of  Labor,  a  dep- 
uty, or  referee,  within  a  stated  period  after  service 
of  the  petition  upon  the  employer  and  the  Secre- 
tary of  the  Bureau,  the  place  of  hearing  to  be  either 
in  the  county  where  the  injury  occurred,  or  where 
the  petitioner  resides,  or  in  which  the  defendant  was 
served  with  process,  or  where  defendant's  place  of 
business  is  located.  (Sec.  5-7.) 

The  proceedings  in  a  case  before  the  Bureau  are 


HOW  IT  WORKS  IN  NEW  JERSEY  237 

of  a  summary  nature.  Both  parties  may  produce 
evidence  exclusive  of  ex  parte  affidavits;  but  the 
official  conducting  the  hearing  is  not  to  be  bound 
by  the  rules  of  evidence.  (Sec.  9.)  The  Bureau 
has  the  power  to  modify  awards  or  permit  commu- 
tation thereof.  (Sec.  10.)  Subpoenas,  witness 
fees,  the  allowance  of  costs,  taking  of  depositions 
of  absent  witnesses,  and  other  legal  formalities  are 
provided  for.  (Sees.  8-18.)  From  the  Bureau's 
decision,  however,  the  "appeal"  to  the  Court  of 
Common  Pleas,  already  described,  may  always  be 
taken,  and  an  entire  new  trial  had.  (Sec.  19.) 
The  Act  creating  the  Workmen's  Compensation 
Aid  Bureau  is  repealed.  (Sec.  22.) 

If  the  1918  Amendment  were  itself  amended  so 
as  to  do  away  with  the  provision  for  a  trial  de  novo 
by  the  Court  of  Common  Pleas,  and  permit  appeals 
to  the  proper  tribunals  on  questions  of  law  only,  it 
would  commend  itself  to  those  who  have  made  the 
most  careful  study  of  compensation  experience,  and 
be  in  harmony  with  the  best  tendencies  of  the  day. 
That  part  of  the  Act  which  bestows  judicial  pow- 
ers upon  the  Bureau  is  in  itself  good ;  and  it  is  only 
insofar  as  the  statute  is  emasculated  by  the  pro- 
yisions  permitting  nullification  of  the  Bureau's  de- 


238      WORKMEN'S  COMPENSATION  AND  INSURANCE 

cision  and  a  wasteful  re-threshing  of  the  whole  case 
by  a  law  court,  that  it  deserves  crushing  criticism. 

The  author's  views,  as  well  as  the  facts,  with 
regard  to  all  the  important  outstanding  features 
of  the  New  Jersey  Workmen's  Compensation  Act 
have  been  set  forth  at  some  length  in  the  forego- 
ing pages.85  The  minor  problems,  and  some  of 
those  common  to  American  compensation  legisla- 
tion— such  as  the  "waiting  period,"  extra-territo- 
rial effect,  etc. — have  been  given  more  general 
treatment  elsewhere. 

85  For  a  recent,  though  not  altogether  satisfactory  review  of  the 
New  Jersey  compensation  law,  see  the  short  article  by  Walter  M. 
Adriance  in  The  American  Economic  Review,  vol.  VII,  pp.  712-713 
(September,  1917). 


CHAPTER  VII 

THE  ATTITUDE  OF  LABOR 

THE  proponents  of  social  legislation  in  this  country 
are  becoming  increasingly  aware  of  the  influence 
exerted  on  theories  and  measures,  not  by  working- 
men,  individually  or  collectively,  but  by  "organized 
labor"  so-called.  Whereas  it  has  become  almost 
a  political  axiom  that  the  labor  vote  elects  no  presi- 
dents, and  may  be  counted  on  in  the  long  run  to  fol- 
low party  lines  with  the  same  faithfulness  and  ap- 
parently for  the  same  reasons  as  the  other  sections 
of  the  population,  leaders  of  the  unions  and  feder- 
ations and  brotherhoods  into  which  the  toilers  have 
organized  themselves  speak  with  no  uncertain  voice 
in  the  nation's  councils.  Where  the  interests  of 
labor  are  involved,  however  remotely,  they  are 
championed  with  varying  degrees  of  success  but 
with  quite  consistent  aggressiveness. 

The  social  utility  of  this  marked  partizanship  of 
labor  organizations  is  questionable.  Class  hatreds 
are  stimulated,  and  the  efficient  conduct  of  state 

239 


240      WORKMEN'S  COMPENSATION  AND  INSURANCE 

business  may  be  very  seriously  hampered,  by  such  a 
policy  as  that  adopted  by  the  California  State  Fed- 
eration of  Labor,  which  distributes  a  "Labor  Rec- 
ord" of  Senators  and  Assemblymen,  tabulating 
their  attitude  on  important  labor  measures  on  the 
basis  of  "Good  Votes"  and  "Bad  Votes."  The  in- 
herent iniquity  of  this  species  of  lobbying  is  the  more 
apparent  in  the  case  of  the  California  report  when 
we  see  that  bills  to  abolish  capital  punishment,  to 
lengthen  the  terms  of  judges,  and  to  license  detec- 
tive agencies,  are  considered  important  "labor 
measures"  on  which  trade  unions  should  stand  and 
fall  together.1 

But  whatever  our  opinions  as  to  the  methods 
which  organized  labor  employs  to  enforce  its  de- 
mands, the  power  of  the  American  Federation  and 
its  branches  is  undeniable,  and  makes  the  question 
of  its  exercise  in  the  great  field  of  workmen's  com- 
pensation one  of  supreme  importance.  In  ascer- 
taining the  sentiments  of  trade  unions  on  various 
aspects  of  compensation  legislation,  I  have  had  re- 
course to  two  principal  sources  of  information. 
One  of  these  sources  has  been  periodical  literature, 

i  See  report  on  Labor  Legislation  and  Labor  Record  of  Senators 
and  Assemblymen  (Forty-first  Session  of  California  Legislature, 
Jan.  4  to  Jan.  30,  and  Mar.  8  to  May  9,  1915) — San  Francisco:  Cal. 
State  Federation  of  Labor. 


THE  ATTITUDE  OF  LABOR  94,1 

especially  labor  publications,  and  speeches  and  arti- 
cles by  labor  leaders;  the  other  has  been  my  cor- 
respondence with  labor  leaders  throughout  the  coun- 
try, to  whom  I  have  written  for  expressions  of  opin- 
ion on  sundry  topics  connected  with  the  subject  at 
hand. 

Criticism  and  comment  by  organized  labor  on 
workmen's  compensation  legislation  have  naturally 
been  directed  toward  those  features  most  closely  af- 
fecting the  practical  interests  of  the  workingman. 
The  employments  covered,  the  accidents  covered, 
the  rates  of  compensation,  the  "waiting  period," 
provisions  for  medical  attention, — these  matters 
have  interested  labor  more  than  complicated  insur- 
ance problems  and  theoretical  questions  which  are 
fundamental  but  not  immediate.  I  am  able  to  pre- 
sent here  a  symposium  of  views  which  appear  to 
be  representative.  But  first  it  will  be  well  to  con- 
sider labor's  views  on  the  basic  principles. 

On  the  general  proposition  of  the  desirability  of 
workmen's  compensation  in  some  form  there  is  sub- 
stantial accord.  As  a  prominent  labor  leader  said 
in  the  hearing  before  the  Employers'  Liability  and 
Workmen's  Compensation  Commission  at  Wash- 
ington in  1911,  "practically  all  labor  unions  of  work- 
ing people  are  wedded  to  the  theory  of  workmen's 


242      WORKMEN'S  COMPENSATION  AND  INSURANCE 

compensation."  2  But  on  many  details  of  the  legis- 
lation in  our  states  no  sort  of  unanimity  has  been 
attained. 

The  plan,  beloved  of  Socialists,  of  incorporating 
workmen's  compensation  into  a  larger  social  insur- 
ance scheme,  has  been  a  special  center  of  attack, 
being  looked  on  by  many  labor  leaders  as  an  evasion 
of  the  real  issue  of  the  laborer's  inherent  interest 
in  the  profits  of  his  toil,  as  well  as  a  dangerous  sign 
of  a  governmental  paternalism  ready  to  crush  out 
the  individual  freedom  of  the  workingman.  A 
contributor  to  the  American  Federationist  writes: 

"Benevolent  society  does  not  go  to  bed-rock  ques- 
tions— why  the  meager  wages,  starved  lives  and 
the  restricted  opportunities  of  those  who  toil  with 
their  hands.  It  offers  palliatives,  not  remedies. 
This  new  form  of  charity  provides  for  the  division 
of  society  into  classes  based  on  wages  received. 
Those  who  receive  less  than  a  specified  sum,  auto- 
matically come  under  government  supervision  on 
the  theory  that  they  are  unable  to  care  for  them- 
selves and  their  dependents  properly.  Therefore, 
the  state  and  their  employers  set  aside  money  for 
their  upkeep  in  times  of  emergency.  The  work- 

2  Senate  Document  No.  338,  62d  Congress,  2d  Session,  at  p.  551 ; 
Statement  of  W.  S.  Carter,  President  Brotherhood  of  Locomotive 
Firemen  and  Engineers. 


THE  ATTITUDE  OF  LABOR  243 

ers  themselves  make  but  meager  contributions. 
Thus  the  fundamental  principle  of  social  insurance 
is  to  make  permanent  distinctions  between  social 
groups  and  to  emphasize  that  distinction  by  gov- 
ernmental regulation.  What  wage-earners  want  is 
not  benevolently  administered  saving  of  pennies  but 
opportunity  to  do  the  world's  work  like  free  men 
and  women  and  to  receive  honest  returns  for  their 
labor  in  the  form  of  adequate  wages.  Get  off  the 
backs  of  the  workers  and  there  will  be  no  need  for 
'insurance,'  for  then  wage-earners  like  employers 
will  have  enough  to  live  on  and  to  provide  for  emer- 
gencies without  'aid.'  " 3 

It  is  submitted  that  in  his  enthusiasm  for  the  gen- 
eral cause  of  advancement  of  the  workingman,  the 
writer  just  quoted  has  suffered  a  temporary  hiatus 
of  common  sense.  There  is  no  reason  in  the  world 
why  social  insurance  should  be  incompatible  with 
high  wages.  There  is  every  reason  in  the  world 
why,  even  with  the  highest  wages  likely  to  be  at- 
tained short  of  the  millennium,  compulsory  insur- 
ance should  be  imposed  on  employers  or  employees 
or  both.  Saving  cannot  take  the  place  of  insur- 
ance ;  both  because  saving  cannot,  and  in  many  in- 

3  Grant  Hamilton  in  American  Federationist,  vol.  XXIV,  pp.  124- 
125  (February,  1917). 


244      WORKMEN'S  COMPENSATION  AND  INSURANCE 

stances  should  not,  be  forced  upon  the  recipient  of  a 
mere  living  wage,  and  because  the  young  man  at 
the  outset  of  his  career,  to  take  one  example,  must 
face  the  danger  of  disabling  accident  without  accu- 
mulated earnings.  There  is  a  need  for  social  in- 
surance not  distinct  from,  but  wholly  incorporate 
with,  the  need  for  a  fairer  division  of  profits  with 
the  men  whose  toil,  equally  with  the  genius  that 
directs  it,  makes  production  possible.  Higher 
wages,  by  raising  the  standard  of  living  from  sub- 
normal to  normal,  will  help  to  stamp  out  disease  and 
the  accidents  traceable  to  poverty  and  its  incidents 
— ignorance  and  insufficient  equipment;  compul- 
sory social  insurance  will  take  care  of  the  diminished 
margin  of  misery,  and  rescue  the  stricken  and  those 
dependent  on  them  from  economic  shipwreck. 

It  is  quite  immaterial  in  this  connection  how  much 
the  workingmen  themselves  contribute  to  the  insur- 
ance fund,  or  whether  they  contribute  at  all;  a 
natural  economic  adjustment  would  take  place  in 
either  instance,  so  that  wages  would  be  greater  or 
less  by  the  amount  of  the  premiums,  depending  on 
whether  or  not  the  laborer  was  called  on  to  pay 
them.  Collecting  from  the  employer  is  collecting 
at  the  source — a  mere  matter  of  convenience. 
Whether  the  state  should  contribute  to  social  insur- 


THE  ATTITUDE  OF  LABOR  345 

ance  funds  is  a  more  puzzling  question.  If  the 
theory  of  industrial  hazard  is  sound,  it  would  seem 
not;  the  funds  should  be  self-supporting,  and  con- 
tributions thereto  drawn  solely  from  the  industry 
directly  affected,  and  not  indirectly  by  taxation 
from  the  people  as  a  whole. 

The  innate  conservatism  of  man,  be  he  capitalist 
or  mechanic,  has  served,  however,  to  raise  quite  a 
formidable  opposition  to  the  extension  of  the  com- 
pulsory social  insurance  principle.  No  less  a 
leader  than  Mr.  Samuel  Gompers  has  declared 
emphatically:  "Our  movement  stands  for  social 
insurance  and  government  aid,  but  of  a  voluntary 
character  and  not  compulsory." 4  It  is  usual  to 
cite  the  success  of  social  insurance  schemes  carried 
on  by  the  trade  unions  themselves  as  an  argument 
against  entrusting  their  administration  to  the  gov- 
ernment; and  to  prate  of  the  danger  to  "funda- 
mental principles  of  human  liberty"  resulting  from 
the  adoption  of  the  compulsory  principle.5  The 
real  reason  why  certain  powerful  forces  in  the 
American  Federation  of  Labor  have  continuously 
opposed  centralized  social  insurance  is  not  far  to 

*  Samuel  Gompers  in  American  Federationist,  vol.  XXIII,  p.  676 
(August,  1916). 

«Ibid.,  pp.  348,  674  (May  and  August,  1916);  see  also  Hamilton 
article  (supra,  footnote  3),  pp.  124-125. 


246      WORKMEN'S  COMPENSATION  AND  INSURANCE 

seek;  its  adoption  would  tend  to  weaken  the  la- 
bor unions,  depriving  them  of  one  of  the  means 
whereby  they  endeavor  to  make  themselves  indis- 
pensable to  the  workingman.  Organized  labor  is 
jealous  of  its  power;  it  regards  itself  as  the  instru- 
mentality dedicated  to  the  task  of  wresting  from 
capitalistic  oppressors  the  share  in  the  profits  of 
production  to  which  the  toiler  deems  himself  enti- 
tled. Consequently,  organized  labor  does  not  rel- 
ish the  idea  of  a  workman  turning  to  another  agency 
— the  government — for  aid  in  his  affliction ;  the  right 
of  the  laborer  to  fight  his  battles  for  economic  rec- 
ognition through  his  own  trade  unions  being  thereby 
infringed. 

The  author  confesses  to  a  complete  lack  of  sym- 
pathy with  this  point  of  view.  He  believes  that 
provision  for  the  compensation  of  both  sick  and  in- 
jured laborers  is  a  matter  of  too  great  public  con- 
cern to  be  left  in  the  hands  of  irresponsible 
voluntary  organizations.  The  purpose  of  social  in- 
surance as  applied  to  workmen's  compensation  is  to 
abolish  the  indigent  class  created  by  industrial  acci- 
dents. To  accomplish  this,  governmental  compul- 
sion is  needed;  it  will  not  do  to  leave  the  workman 
the  option  of  insuring,  for  that  would  mean  that  in 
many  instances  the  gambling  spirit  would  assert  it- 


THE  ATTITUDE  OF  LABOR  247 

self,  and  insurance  would  be  neglected  on  the  chance 
that  no  accident  would  occur.  Moreover,  if  the 
old  liability  system  were  retained,  the  workman 
would  often  be  too  poor  to  insure  himself  ade- 
quately, since  the  employer,  being  subject  to  expen- 
sive damage  suits  for  injuries  to  his  employees, 
would  be  compelled  to  hold  in  reserve  to  meet  those 
emergencies  a  sum  which  ought  to  be  expended  in 
increasing  wages,  or  insuring  reasonable  compensa- 
tion. Under  an  adequate  workmen's  compensation 
system,  where  awards  are  properly  secured — and 
that  can  mean  only  some  sort  of  state  insurance — 
the  employee  has  no  need  to  insure  himself  against 
accidents,  as  payment  in  the  case  of  injury  is  guar- 
anteed him.  Hence,  where  workmen's  compensa- 
tion is  adopted,  the  question  left  is  not  one  affecting 
the  independence  of  the  employee  at  all,  but  simply 
the  relative  efficiency  of  pure  compensation  and  in- 
sured awards,  the  liability  of  the  employer  being 
fixed  in  either  case. 

Bitter  as  is  the  present-day  opposition  from  some 
quarters  to  applying  social  insurance  principles  even 
to  the  comparatively  narrow  field  of  workmen's 
compensation  laws,  it  is  encouraging  to  note  that 
one  form  of  unprogressive  criticism  is  slowly  dying 
out.  In  the  earlier  days  of  the  movement,  the  pop- 


248      WORKMEN'S  COMPENSATION  AND  INSURANCE 

ularity  of  "elective"  acts  which  left  it  optional  with 
both  parties  to  labor  contracts  whether  the  provi- 
sions of  the  "experimental"  new  legislation  should 
apply,  was  one  of  the  striking  manifestations  of  the 
eagerness  of  organized  labor  to  retain  its  independ- 
ence from  governmental  "paternalism."  As  re- 
cently as  1914  the  Convention  of  Railroad  Conduc- 
tors "was  not  opposed  to  compensation  if  it  could  be 
made  optional,  and  favors  improving  and  strength- 
ening liability  laws."  6  But  this  feeling  has  largely 
given  way  to  an  eager  desire  for,  and  a  general  ac- 
quiescence in,  compulsory  compensation — as  distin- 
guished from  compulsory  social  insurance — by  the 
labor  interests.  The  joint  Commission  of  the 
American  Federation  of  Labor  and  the  National 
Civic  Federation,  reporting  in  1914,  summed  up 
the  situation  as  follows : 

"The  Commission  found  that  as  employees  be- 
came accustomed  to  the  working  of  compensation 
acts  and  realized  that  they  were  real  and  substantial 
and  that  payments  were  made  promptly,  they  lost 
interest  in  the  question  of  employers'  liability  laws, 
they  generally  expressed  themselves  as  satisfied  with 
a  good  compensation  act  and  did  not  care  for  the 

«  In  Report  of  Proceedings  of  24th  Annual  Convention,  1914,  Amer- 
ican Federation  of  Labor. 


THE  ATTITUDE  OF  LABOR  249 

option  to  sue  under  the  liability  law.  While  this 
was  not  always  the  case,  it  is  rapidly  becoming  the 
dominating  thought.  In  fact,  the  evolution  of  this 
legislation  tends  toward  making  the  compensation 
act  an  exclusive  remedy."  7 

To  the  attitude  of  labor  towards  the  more  specific 
questions  raised  by  workmen's  compensation — in- 
juries covered,  employments  covered,  methods  of 
administration,  amount  of  compensation,  etc. — rec- 
ommendations of  the  Executive  Committee  of  the 
American  Federation  of  Labor  furnish  the  best  key. 
Supplementing  this  and  similar  data  by  frequent 
reference  to  my  letter-file,  I  am  enabled  to  present 
the  following  outline  of  labor  opinion  on  the  sub- 
ject at  hand  as  I  have  found  it. 

Basis  of  Computing  Compensation  Rates. 
Early  compensation  laws,  like  that  in  force  to-day 
in  New  Jersey,  unquestionably  erred  on  the  side 
of  parsimony  in  their  schedules  of  awards.  The 
basis  of  computation  was  commonly  50  per  cent.; 
thus,  if  a  workman  were  totally  disabled  for  a  period 
of  four  months,  he  would  receive  by  way  of  com- 
pensation a  sum  equal  to  only  one-half  of  his 
wages  during  that  period,  and  even  that  was  likely 
to  be  curtailed  by  some  absurd  provision,  as  that 

i  U.  S.  Senate  Document  419,  63d  Congress,  2d  Session. 


250      WORKMEN'S  COMPENSATION  AND  INSURANCE 

not  more  than  $10  a  week  should  be  paid  to  any 
victim.  The  obvious  inadequacy  of  such  payments 
naturally  attracted  the  attention  of  those  directing 
the  movements  of  organized  labor ;  and  the  legisla- 
tures were  very  shortly  under  fire  from  labor  lobby- 
ists, who  demanded  a  more  liberal  basis  of  compen- 
sation. The  American  Federation  puts  first  on  its 
list  of  injunctions  to  agitators  for  compensation  re- 
forms :  "Endeavor  to  bring  the  basis  of  compensa- 
tion rates  to  a  minimum  of  66%%  of  the  wages  of 
the  insured."  8 

It  has  been  my  experience  that  this  proposal  of 
the  Federation  meets  with  general  approval  among 
workingmen,  though  I  have  talked  with  some  who 
argued  that  75%  was  a  more  equitable  proportion. 
A  correspondent  from  the  Massachusetts  State 
Branch  of  the  American  Federation  of  Labor 
writes : 

"In  Massachusetts  the  rate  of  compensation  is 
two-thirds  wages  and  appears  at  present  to  be  satis- 
factory. The  maximum  of  $10.00,  however,  is  con- 
sidered too  low  and  attempts  have  been  made  to 
increase  it  to  $14.00."  9 

s  Report  of  Proceedings  of  25th  Annual  Convention,  1915,  Amer- 
ican Federation  of  Labor,  at  page  96. 

» Letter  from  H.  Sterling,  Mass.  Branch  Amer.  Fed.  of  Labor, 
Dec.  2,  1916.  See  also  leaflet:  "Labor  Legislative  Measure  for  1917," 
published  by  the  Massachusetts  organization. 


THE  ATTITUDE  OF  LABOR  251 

From  Maryland  comes  the  following  forceful 
statement : 

"The  schedule  of  award  should  increase;  fifty  per 
cent,  is  not  enough.  Personally  my  idea  would  be 
to  eliminate  the  waiting  period,  increase  the  com- 
pensation to  66%%  with  a  minimum  of  five  dollars 
and  a  maximum  of  fifteen  dollars.  The  compensa- 
tion to  be  awarded  from  the  first  day  and  to  be  paid 
without  the  necessity  of  going  through  a  lot  of  red 
tape  to  get  it."  10 

The  Secretary-Treasurer  of  the  Kentucky  State 
Federation  of  Labor  shares  the  same  views : 

"66%%  is,  I  believe,  a  fair  schedule  of  benefits 
for  injury  with  a  maximum  weekly  payment  of  not 
more  than  $15.00,  and  in  case  of  total  disability,  to 
continue  during  lifetime."  n 

In  the  report  of  the  Conference  of  the  Pennsyl- 
vania Federation  of  Labor  for  1916,  appears  this 
significant  item: 

"Motion  by  Fowler  that  an  endeavor  be  made  to 
have  the  percentage  of  compensation  raised  to 
sixty-six  and  two-thirds  per  cent.  Carried."  12 

10  Letter  from  Henry  J.  Hardy,  Cor.  and  Rec.  Sec'y-i  Maryland 
State  and  Dist.  of  Columbia  Fed.  of  Labor,  Aug.  17,  1916. 

"Letter  from  P.  J.  Campbell,  Sec'y.-Treas.,  Ky.  State  Fed.  of 
Labor,  Aug.  16,  1916. 

12  See  Report  Pa.  Fed.  of  Labor  Conference,  Mar.  1916,  at  page  6. 


252      WORKMEN'S  COMPENSATION  AND  INSURANCE 

"Efforts  will  be  made  at  the  next  session  of  the 
legislature  to  amend  the  law  so  as  to  provide  for 
an  increase  in  the  compensation  to  66%%  of  the 
wage  received  at  the  time  of  injury,"  writes  a  Kan- 
sas Labor  official.13 

In  New  Jersey  similar  views  are  expressed.14 
From  Porto  Rico  comes  a  demand  for  a  75% 
basis  15 — but  insistence  on  so  high  a  percentage  I 
have  found  very  unusual.15*  A  North  Dakota  cor- 
respondent even  expresses  himself  as  satisfied  with 
60%. 16 

is  Letter  from  Chas.  Hamlin,  Sec'y>Treas.,  Kan.  State  Fed.  of 
Labor,  Aug.  26,  1916. 

n  Letter  from  H.  T.  Hilfers,  Sec'y.,  Essex  Trades  Council  (N.  J.), 
Aug.  25,  1916. 

is  Letter  from  Rafael  Alonzo,  Gen.  Sec'y.,  Federaci<5n  Libre  de  los 
Trabajadores  de  Puerto  Rico,  Sept.  23,  1916.  The  English  of  the 
writer  is  curious:  "A  man  disabled  or  despoiled  of  his  means  to 
earn  his  life  should  receive  highest  percentage  of  the  wages  that  he 
was  able  to  earn  in  his  normal  state  to  work.  A  75  %  is  a  fair  per- 
centage." 

i6a  The  author,  in  the  course  of  an  interview  with  Frank  Morrison, 
Secretary  of  the  American  Federation  of  Labor,  on  May  3,  1918, 
asked  Mr.  Morrison  what  wage  percentage  basis  for  compensation 
awards  the  Federation  stood  for.  "We  stand  for  all  we  can  get," 
he  replied;  but,  on  being  pressed,  he  admitted  that  100%  would 
probably  be  inadvisable,  as  encouraging  malingering.  Mr.  Morri- 
son's attitude,  if  really  portrayed  by  his  hasty  remark,  is  extreme  and 
exceptional. 

i«  Letter  from  A.  W.  Bowman,  Fargo  Trades  and  Labor  Assembly 
(No.  Dak.),  Sept.  21,  1916.  Mr.  Bowman's  answer  to  my  question 
as  to  rates:  "I  think  60%  would  be  fair,"  may  be  coupled  with  his 
answer  to  another  question  as  to  how  active  labor  organizations  in 
North  Dakota  had  been  in  compensation  matters:  "Two  years  ago 


THE  ATTITUDE  OF  LABOR  253 

To  conclude,  labor  appears  content  that  compen- 
sation awards  shall  be  computed  on  a  basis  of  two- 
thirds  of  normal  wages ;  and  in  the  present  writer's 
opinion,  that  percentage,  which  has  already  been 
adopted  in  several  states,  is  an  eminently  fair  and 
practical  one.  Less  would  cause  suffering;  more 
would  encourage  malingering. 

The  "Waiting  Period."  It  was  feared  by  the 
framers  of  the  early  compensation  acts  in  this  coun- 
try that  an  immediate  payment  of  compensation 
from  the  date  of  injury  would  result  in  a  multitude 
of  trivial  claims ;  and  it  was  also  felt  that  a  certain 
period  of  time  should  be  allowed  to  elapse  between 
the  accident  and  any  disbursement,  in  order  to  de- 
termine the  extent  of  the  injury  and  the  facts  on 
which  the  employee's  claim  was  predicated.  Con- 
sequently the  "waiting  period"  was  devised,  dur- 
ing which  no  compensation  is  payable,  and  varying 
under  the  American  acts  anywhere  from  three  days 
to  three  weeks  in  length,  though  a  two  weeks'  period 
has  been  adopted  in  most  jurisdictions. 

Needless  to  say,  this  feature  has  been  a  target 
for  attack  by  the  labor  unions.  They  have  pointed 
out  that  there  is  no  logical  reason  for  an  arbitrary 

we  got  the  compensation  through  the  Senate,  but  it  was  killed  in 
the  House,"  to  indicate  that  his  estimate  was  based  on  conjecture 
rather  than  experience. 


254      WORKMEN'S  COMPENSATION  AND  INSURANCE 

deprivation  of  compensation  during  a  part  of  the 
period  of  disability;  and  they  have  enlarged  also 
upon  the  hardship  caused  to  very  poor  families 
whose  income  is  suddenly  cut  off  at  a  time  when  it 
is  particularly  needed.  There  is  much  justice  in 
these  criticisms. 

It  is  worthy  of  note,  however,  that  labor  unions 
are  not  unanimous  in  their  demands  for  the  aboli- 
tion of  the  waiting  period,  though  there  is  general 
agreement  that  it  should  be  as  short  as  is  compatible 
with  its  purposes.  Where  medical  attention  is  to 
be  given  at  the  employer's  expense  for  a  limited 
period,  it  seems  to  be  the  view  of  labor  leaders  that 
a  change  should  be  effected,  making  such  atten- 
tion co-extensive  with  the  suffering. 

I  subjoin  a  representative  collection  of  opinions 
on  the  waiting  period,  indicating  in  each  case  the 
state  in  which  the  particular  labor  leader  is  active: 

Oklahoma:  "The  waiting  period  should  at  least 
be  shortened,  if  not  abolished,  and  the  medical 
period  lengthened."  17 

Montana:  "The  waiting  period  is  not  satisfac- 
tory but  I  would  not  say  without  further  expres- 
sions of  opinions  from  those  concerned  in  this  move- 

«  Letter  from  Ollie  S.  Wilson,  Sec'y.-Treas.,  Okla.  State  Fed.  of 
Labor,  October  18,  1916. 


THE  ATTITUDE  OF  LABOR  255 

ment  whether  it  should  be  abolished  entirely  or 
not."  18 

New  York:  "Chief  defects  of  the  law  are  long 
waiting  periods  and  permitting  old-line  companies 
to  participate  in  business."  19 

New  Jersey:  "I  am  in  favor  that  (sic)  the  wait- 
ing period  should  be  abolished,  and  the  worker 
should  get  compensation  providing  that  he  is  sick 
a  week  or  more."  20 

Kansas:     "A  shorter  waiting  period."  21 

California:  "The  waiting  period  should  be  re- 
duced from  two  weeks  to  one  week."  22 

Iowa:  "I  beg  to  advise  you  that  the  present  ob- 
jections to  the  Iowa  law  is  (sic)  the  time  limit  in 
which  the  injured  employee  is  attended  by  the  physi- 
cian. Also  the  waiting  period  of  two  weeks  and 
the  amount  of  the  compensation."  23 

Pennsylvania:  "Motion  that  the  time  to  begin 
paying  compensation  be  one  day  instead  of  fourteen 

is  Letter  from  O.  M.  Partelow,  Sec'y.,  Silver  Bow  Trades  and  Labor 
Council  (Montana),  Oct.  17,  1916. 

19  Letter   from   E.   A.   Bates,  Sec'y.-Treas.,  N.  Y.   State  Fed.  of 
Labor,  Aug.  31,  1916. 

20  See  footnote  14. 

21  See  footnote  13. 

22  Letter  from  Paul  Scharrenberg,  Sec'y.-Treas.,  Cal.  State  Fed.  of 
Labor,  Aug.  25,  1916. 

23  Letter  from  J.  A.  Canfield,  Sec'y.-Treas.,  Iowa  State  Fed.  of 
Labor,  Aug.  21,  1916. 


256      WORKMEN'S  COMPENSATION  AND  INSURANCE 

days  after  accident.  Amendment  that  the  pay- 
ments begin  from  the  time  of  the  accident.  Amend- 
ment carried.  Motion  as  amended  carried."  24 

Kentucky:  "There  should  be  no  waiting  period, 
payment  should  begin  at  once."  25 

Maryland:  "Personally  my  idea  would  be  to 
eliminate  the  waiting  period."  26 

Massachusetts:  "Our  waiting  period  was  re- 
duced last  year  from  fourteen  days  to  ten  days,  and 
seems  to  be  satisfactory  except  that  we  desire  that 
when  disability  continues  twenty-eight  days,  com- 
pensation should  begin  from  date  of  accident."  27 

Arizona:  "The  injured  man  should  be  paid  for 
the  time  that  he  loses  from  the  time  that  he  is  off 
duty  on  account  of  his  injury,  instead  of  losing  the 
first  two  weeks  of  his  time."  28 

Minnesota:  "Our  recent  convention  also  went 
on  record  for — reducing  the  waiting  period  to  seven 
days."  29 

Employments  Covered  by  Acts.    As  a  question 

24  Seefootnote  12 

a«See  footnote  11. 

2«See  footnote  10. 

2TSee  footnote  9. 

28  Letter  from  Thos.  A.  French,  Sec'y.-Treas.,  Arizona  State  Fed. 
of  Labor,  Aug.  15,  1916. 

2»  Letter  from  George  W.  Lawson5  Sec'y.,  Minn.  State  Fed.  of 
Labor,  Aug.  25,  1916. 


THE  ATTITUDE  OF  LABOR  257 

•of  pure  theory,  the  logical  necessity  of  the  inclusion 
of  all  employments  under  an  equitable  workmen's 
compensation  law  is  not  even  debatable.  The  early 
acts  were  confined  in  their  operation  to  "hazardous 
employments";  but  all  employments  involve  some 
hazard,  and  it  is  only  fair  that  there  should  be  pro- 
tection in  proportion  to  the  danger.  At  one  time 
it  was  suspected  that  the  inclusion  of  all  employ- 
ments within  the  purview  of  workmen's  compensa- 
tion acts  would  be  opposed  by  organized  labor  on 
selfish  grounds;  but  that  that  suspicion  was  un- 
founded, and  that  the  labor  unions  are  in  substantial 
accord  in  their  demand  for  laws  of  the  broadest 
application,  is  clear  from  the  following  quotations: 

Arkansas:  "It  seems  to  me  that  casual  em- 
ployees should  not  be  excluded  from  the  be/iefits 
of  a  compensation  act."  30 

Maryland:  "The  law  should  be  extended  to 
cover  all  classes  of  employment  and  not  merely  the 
hazardous  class  to  the  wife  and  children  of  the  de- 
pendent." 31 

California :  "I  do  believe  that  the  compensation 
should  be  made  compulsory  for  all  employments."  32 

so  Letter   from  L.   H.   Moore,  Sec'y.-Treas.,  Ark.  State   Fed,  of 
Labor,  Sept.  14,  1916. 
si  See  footnote  10. 
32  See  footnote  22. 


258      WORKMEN'S  COMPENSATION  AND  INSURANCE 

North  Dakota:  "I  would  favor  all  employ- 
ments under  this  law."  33 

Montana :  "As  to  the  chief  defects  of  the  exist- 
ing law,  they  are  too  numerous  to  mention.  .  .  . 
It  does  not  cover  aliens.  It  is  not  compulsory  upon 
all."  34 

One  discordant  note,  however,  comes  from  a  labor 
leader  in  Oklahoma :  "Would  suggest  .  .  .  changes 
.  .  .  for  instance,  excluding  the  employer  with  only 
two  employees,  the  adding  and  making  clear 
further  industries.  .  .  ." 35  It  is  submitted  that 
excepting  small  employers  from  the  operation  of 
the  acts  in  accordance  with  this  suggestion  would 
serve  no  useful  purpose,  and  is  contrary  to  the  spirit 
of  workmen's  compensation  as  well  as  the  current 
of  intelligent  labor  opinion. 

The  question  of  what  employments  should  be  cov- 
ered by  the  compensation  acts  has  not  been  dis- 
cussed to  any  considerable  extent  in  recent  conven- 
tions of  the  American  Federation  of  Labor.     The 
liberal  temper  of  that  organization,  however,  so  far 
as  this  subject  is  concerned,  is  indicated  by  the  sup- 
port given  to  the  movement  (now  happily  success- 
ful) to  assure  the  extension  of  compensation  pro- 
as See  footnote  16.  at  See  footnote  17. 
s*  See  footnote  18. 


THE  ATTITUDE  OF  LABOR  259 

visions  to  workers  engaged  in  loading  vessels  and 
services  of  a  similar  nature.358 

Occupational  Diseases.  Although  certain  occu- 
pational diseases  have  been  included  among  the 
*  'accidents"  for  which  compensation  is  due  in  Eng- 
land for  many  years,  and  their  number  is  constantly 
being  added  to,36  the  compensation  laws  of  the 
United  States  have  been  slow  to  recognize  the  in- 
disputable fact  that  the  acquiring  of  certain  diseases 
is  as  truly  due  to  occupational  hazard  as  the  blow- 
ing off  of  a  workman's  arm  by  an  explosion  in  a 
dynamite  factory.  Lead  poisoning,  for  example,  in 
the  paint  industry,  is  a  danger  to  which  the  laborer 
is  constantly  exposed,  and  for  which  the  industry 
should  be  made  to  pay.37 

Recently  the  American  Federation  of  Labor  has 
turned  its  attention  to  the  question  of  occupational 
disease.  To  the  list  of  the  recommendations  of  the 
Committee  on  Education  on  Workmen's  Compen- 
sation, the  following  has  been  added,  and  strongly 

asa  Amer.  Fed.  of  Labor,  Proceedings,  37th  Annual  Convention, 
1917,  pp.  116,  311,  312. 

se  The  English  Act  (6  Edw.  VII,  c.  58),  s.  8,  subd.  6,  also  Schedule 
3.  The  schedule  enumerates  compensable  occupational  diseases;  the 
other  provision  permits  additions  to  this  list  by  the  Secretary  of 
State. 

*T  Honnold,  Workmen's  Compensation,  p.  542.  See  Adams  v.  Acme 
Works,  182  Mich.  157.  ' 


260      WORKMEN'S  COMPENSATION  AND  INSURANCE 

urged  upon  the  labor  unions  engaged  in  securing 
legislative  reforms:  "Compensation  to  be  paid  for 
death  or  illness  from  occupational  diseases."  38  At 
the  Pennsylvania  Federation  of  Labor  Conference, 
March  22,  1916,  a  "motion  to  include  occupational 
disease  in  the  Compensation  Act  amendment"  was 
carried.39 

With  the  qualifications,  therefore,  already  shown 
to  be  attached  to  labor's  support  of  social  insur- 
ance, the  attitude  of  labor  on  the  inclusion  of  occu- 
pational diseases  among  compensable  injuries  can 
be  said  to  be  distinctly  favorable. 

Methods  of  Administration.  A  law  which  is  not 
enforced  is  worse  than  no  law  at  all,  for  it  holds  the 
whole  administration  of  justice  up  to  ridicule,  and 
invites  attacks  upon  the  social  system  at  other 
points.  It  is  all-important,  therefore,  that  the  ad- 
ministration of  so  far-reaching  a  measure  as  a  work- 
men's compensation  act  should  be  placed  in  the 
hands  of  officials  trained  for  the  work,  conscientious 
and  reliable  in  the  highest  degree,  and  properly  re- 
sponsible for  their  actions.  Is  it  better  to  leave 
the  administration  of  the  law  to  an  insurance  com- 
mission appointed  by  the  Governor?  to  an  elected 

ss  Amer.  Fed.  of  Labor,  Proceedings,  25th  Annual  Convention,  1915, 
p.  96. 
89  Report  of  Proceedings,  p.  7. 


THE  ATTITUDE  OF  LABOR  261 

board?  to  a  legislative  commission?  or  to  the  courts? 
The  question  has  been  variously  answered  by  the 
state  legislatures.  With  the  merits  of  the  con- 
troversy we  are  not  here  concerned ;  but  the  follow- 
ing expressions  of  opinion  by  labor  leaders  may 
prove  of  interest: 

Florida:  "I  think  if  a  compensation  law  was 
left  up  to  a  commission  to  administer,  that  the  com- 
mission should  be  composed  of  the  most  learned  men 
possible,  and  that  the  commission  should  be  com- 
posed of  men  from  all  walks  of  life,  who  are  well- 
trained,  or  who  have  had  much  experience  in  deal- 
ing in  justice.  I  think  it  would  probably  be  best 
to  have  men  educated  for  this  particular  work."  40 

California :  "I  think  the  California  law  is  fairly 
efficiently  administered."  41  (An  Industrial  Acci- 
dent Commission  is  in  control  under  the  California 
Act.) 

Kentucky:  Administration  "by  special  commis- 
sion" is  favored  by  an  official  of  the  Federation  of 
Labor  of  this  State.42 

Georgia:  "This  is  another  question  that  should 
be  decided  by  conditions.  In  states  with  small  pop- 

*o  Letter  from  L.  R.  Campbell,  Fla.  State  Fed.  of  Labor,  Aug.  14» 
1916. 

41  See  footnote  22. 

42  See  footnote  11. 


262      WORKMEN'S  COMPENSATION  AND  INSURANCE 

illations  and  having  no  large  industrial  centers  I 
think  the  courts  could  handle  the  matter  in  a  very 
satisfactory  manner.  In  other  states,  I  am  of  the 
opinion  the  courts  are  so  crowded  with  work  now 
it  would  be  impossible  for  them  to  undertake  it  and 
a  special  commission  would  prove  more  satisfac- 
tory." 43 

New  York:  "We  consider  the  act  has  been 
fairly  and  efficiently  administered."44  (The  New 
York  compensation  law  is  under  the  superintend- 
ence of  an  Industrial  Commission.) 

Iowa:  "The  law  in  this  state  has  worked  out 
fairly  well,  considering  the  short  time  it  has  been 
in  operation."  45  ( Supervision  by  the  Industrial 
Commission  is  the  order  of  things  in  Iowa.) 

Oklahoma :  "The  method  of  administering  is  all 
right,  to  my  mind,  but  the  law  of  course  restricts  the 
industrial  commission  and  from  that  they  are  unable 
to  depart,  hence  the  necessity  for  amendment."  46 

Arizona:  "The  principal  objection  to  the  pres- 
ent law  is  the  fact  that  there  seems  to  be  no  way  to 
force  the  employer  to  pay  without  going  into  court, 

«  This  very  sensible  and  thoughtful  answer  is  from  Robt.  Fechner, 
Secretary  of  the  Ga.  State  Fed.  of  Labor,  under  date  of  Aug.  30, 
1916. 

<*  See  footnote  19. 

«  See  footnote  23. 

*«See  footnote  17. 


THE  ATTITUDE  OF  LABOR  263 

and  the  injured  worker,  in  most  cases,  has  no  money 
to  go  into  court."  47 

North  Dakota:     "I  would  favor  commission." 48 

The  American  Federation  of  Labor  itself  has  set 
the  seal  of  its  official  approval  on  commission  ad- 
ministration, having  adopted  this  resolution  at  its 
convention  in  1915: 

"Administration  of  compensation  laws  in  future 
to  be  under  the  supervision  of  state  commissions 
appointed  for  that  duty  alone."  49 

The  relegating  of  compensation  business  to  the 
courts  is  thus  becoming  more  and  more  unpopular. 
It  can  be  stated  with  confidence  that  organized 
labor  is  in  full  sympathy  with  the  recognized  tend- 
ency to  place  the  administration  of  these  laws  in 
the  hands  of  appointed  commissions,  with  broad 
discretionary  powers. 

Labor  sentiment  is  shifting  and  uncertain,  buli 
may  fairly  be  counted  on  to  follow  the  present  ad- 
vantage of  the  workingman,  as  he  himself  sees  it. 
Thus  his  interest  in  and  his  ardor  for  compensation 
reforms  vary  with  the  immediateness  of  the  prob- 
lems they  are  intended  to  solve.  In  this  chapter 

47  See  footnote  28.  «  See  footnote  38. 

**  See  footnote  16. 


264      WORKMEN'S  COMPENSATION  AND  INSURANCE 

the  author  has  simply  sought  to  picture  the  attitude 
of  labor  at  the  present  day,  as  to  a  few  of  the  well- 
recognized  issues  which  confront  all  students  of  the 
subject.  It  may  well  be  that  a  few  months  from 
now  the  attention  of  trade-union  leaders  will  be 
quite  otherwise  focussed,  and  their  views  on  the 
very  groundwork  of  the  compensation  principle 
have  undergone  radical  changes. 


CHAPTER  VIII 
THE  SOLDIERS'  AND  SAILORS'  INSURANCE  ACT 

WITH  the  entrance  of  the  United  States  into  the 
Great  War,  the  American  nation  suddenly  found 
itself  face  to  face  with  a  prospect  of  probable  deaths 
and  disabling  injuries  among  its  citizens  within  a 
brief  period,  upon  a  scale  hitherto  undreamed-of. 
The  closest  parallel  is  the  Civil  War ;  but  the  serious 
nature  of  that  conflict  was  not  suspected  at  the  out- 
set, whereas  in  the  Armageddon  of  to-day  the 
strength  and  resources  of  the  enemy  are  known  to  be 
enormous,  and  his  determination  great.  Fully 
aware  of  the  facts,  therefore,  the  Administration, 
shortly  after  the  declaration  of  war  in  April,  19 17> 
set  itself  with  commendable  energy  to  the  task  of  de- 
vising means  to  prevent  at  least  some  of  the  antici- 
pated disastrous  social  consequences  of  the  cata- 
clysm; and  the  Soldiers'  and  Sailors'  Insurance 
Act  of  October  6,  1917,  is  the  result.1 

The  social  problem  presented  by  war  risks  is  the 
same  as  that  growing  out  of  industrial  hazards ;  but 

i  Public,  No.  90,  65th  Congress  (approved  Oct.  6,  1917). 

265 


266      WORKMEN'S  COMPENSATION  AND  INSURANCE 

the  appeal  to  a  nation's  sense  of  justice  is  more  dra- 
matic in  the  former  case.  This  accounts,  in  large 
part,  for  the  universal  acquiescence  in  the  policy  of 
compensating  and  insuring  our  fighting  men ;  an  ac- 
quiescence unique  in  the  history  of  compensation 
legislation.  Even  the  private  insurance  companies 
have  for  the  most  part  left  off  grumbling  at  the  in- 
terference of  the  government  in  the  insurance  busi- 
ness, and  have  cooperated  heartily  in  the  adminis- 
tration of  the  new  law.2 

No  nation  of  modern  times  has  ever  taken  lightly 
the  duty  it  owes  to  the  soldiers  who  fought  to  pre- 
serve it,  and  to  their  widows  and  other  dependents. 
The  common  method  of  discharging  this  obligation, 
however,  has  been  by  a  system  little  differentiated 
from  poor-relief — the  system  of  pensions.  Crip- 
pled or  aged  warriors,  the  families  of  men  killed  in 
battle,  and  sometimes  even  able-bodied  young  men 
who  emerge  from  the  service  quite  as  competent  to 
earn  their  living  as  before,  have  been  the  recipients 
of  a  somewhat  hectic  bounty.  On  the  other  hand, 
deserving  claimants  have  often  been  overlooked. 
The  pension  system  reached  its  climax  of  absurdity 
and  inequity  in  the  United  States  in  the  period  fol- 

2  See  Weekly  Underwriter,  vol.  XCVIII,  no.  2,  p.  34   (Jan.  12, 
1918).    The  article,  however,  criticises  some  features  of  the  act. 


THE  SOLDIERS'  AND  SAILORS'  INSURANCE  ACT      267 

lowing  the  Civil  War,  when  pensions  became  the 
tool  of  political  aspirants,  were  used  to  buy  votes,  to 
curry  favor  with  patriotic  constituents,  and  to  sup- 
port distant  relatives  of  long-dead  veterans  whose 
claims  upon  the  public  gratitude  were  of  the 
slightest. 

The  pension  scandals  were  the  inevitable  result 
of  a  disorganized  and  haphazard  method  of  admin- 
istering aid  to  those  deemed  to  have  deserved  well  of 
their  country.  No  one,  we  suppose,  will  dissent 
from  the  proposition  that  where  a  man  has  incurred 
disability  while  fighting  to  protect  his  fellow-citi- 
zens, those  fellow-citizens  should  see  to  it  that  his 
enforced  non-productiveness  does  not  result  in  any 
more  misery  to  him  than  can  possibly  be  avoided. 
Common  justice  and  national  egoism  alike  dictate  a 
liberal  policy  of  compensating  the  crippled  hero, 
and  of  showing  such  signal  gratitude  for  his  services 
as  to  encourage  others  to  serve  as  faithfully.  It 
does  not  follow,  however,  that  money  bestowed  in- 
discriminately in  sporadic  bursts  .of  enthusiasm 
effectively  accomplishes  these  desired  ends.  As  in 
the  administration  of  all  compensation  schemes,  two 
things  are  essential  to  success:  first,  that  the 
amounts  paid  be  proportionate  to  the  disability,  and 
to  the  number  of  dependents  deprived  of  support; 


268      WORKMEN'S  COMPENSATION  AND  INSURANCE 

and,  secondly,  that  the  element  of  charity  or  gratu- 
ity be  dissociated  from  the  whole  scheme,  so  that  a 
self-respecting  man  can  accept  the  money  as  his  just 
due,  as  the  liquidation  of  society's  obligation  to  him. 

These  fundamental  principles  have  been  fully 
recognized  in  the  compensation  provisions  of  the 
Act  of  October  6, 1917,  and  in  the  sections  covering 
allotments  and  allowances  to  dependents.  Fur- 
thermore, the  Act  introduces  a  scheme  for  voluntary 
insurance  which  should  have  a  great  effect  in  reduc- 
ing the  poverty  caused  by  the  death  or  disability  of 
men  who  are  actually  or  potentially  the  supporters 
of  families;  and  vocational  training  and  rehabilita- 
tion of  crippled  soldiers  are  not  overlooked.  These 
and  other  features  will  be  briefly  outlined  here. 

The  Soldiers'  and  Sailors'  Insurance  Act  (as  we 
have  termed  it)  is  in  the  form  of  an  amendment  to 
the  statute  of  September  2,  1914,  creating  the  War 
Risk  Insurance  Bureau.  It  establishes  a  Division 
of  Military  and  Naval  Insurance  in  that  Bureau, 
and  charges  it  with  the  administration  of  all  the  pro- 
visions with  which  we  are  here  concerned.  The 
whole  is  organized  under  the  Treasury  Depart- 
ment ;  and  the  scheme  itself  is  said  to  have  been  the 
outcome  of  cooperation  between  the  Treasury,  the 
Committee  on  Labor  of  the  Advisory  Commission 


THE  SOLDIERS'  AND  SAILORS'  INSURANCE  ACT      269 

of  the  Council  of  National  Defense,  the  Depart- 
ments of  Commerce,  Navy  and  Labor,  an  advisory 
committee  of  insurance  representatives,  and  others.3 
Insofar  as  the  voluntary  insurance  provisions  are 
concerned,  the  moving  cause  may  be  said  to  have 
been  the  prohibitive  rates  charged  by  the  insurance 
companies  to  men  entering  the  active  military  or 
naval  branches.4 

The  first  important  subdivision  of  the  compre- 
hensive scheme  of  the  Act  is  the  plan  of  family  allot- 
ments and  allowances.  The  United  States  does  not 
intend  that  men  in  the  military  or  naval  service  shall 
leave  their  wives  and  children  to  shift  for  them- 
selves ;  nor  does  it  propose  that  the  amount  of  money 
received  by  the  dependents  of  an  enlisted  man  shall 
be  limited  by  what  he  can  spare  from  his  soldier's 
pay,  in  cases  where  such  provision  would  be  grossly 
inadequate.  Accordingly,  it  is  provided :  first,  that 
a  soldier  or  sailor  with  a  wife  or  children  must  make 
an  allotment  to  them  of  a  fixed  proportion  of  his 
pay ;  and  secondly,  that  the  Government  will  add  to 
this  an  allowance  graded  according  to  the  number 
of  dependents.  Furthermore,  where  the  enlisted 
man  voluntarily  allots  part  of  his  stipend  to  a  pa- 

»  American  Economic  Review,  vol.  VII,  p.  196  (March,  1918). 
*  Ibid. 


270      WORKMEN'S  COMPENSATION  AND  INSURANCE 

rent,  grandparent,  brother  or  sister,  the  Govern- 
ment will,  under  certain  restrictions,  supplement 
such  payment  by  a  generous  family  allowance. 

Compulsory  allotments  to  wife  or  children  are  in 
no  case  to  be  less  than  fifteen  dollars,  nor  more 
than  half  pay;  but  with  these  restrictions  they  are 
always  to  be  in  an  amount  equal  to  the  family 
allowances  provided  for.  The  latter,  in  "Class  A" 
or  the  compulsory  class,  are  as  follows:  if  there  be 
a  wife  but  no  child,  $15;  if  there  be  a  wife  and 
one  child,  $25 ;  if  there  be  a  wife  and  two  children, 
$32.50,  with  $5  per  month  for  each  additional  child; 
if  there  be  no  wife,  but  one  child,  $5 ;  if  there  be  no 
wife,  but  two  children,  $12.50;  if  there  be  no  wife, 
but  three  children,  $20 ;  if  there  be  no  wife,  but  four 
children,  $30,  with  $5  per  month  for  each  additional 
child.  Family  allowances  are  in  no  case  to  exceed 
$50  per  month;  and  are  to  be  paid  by  the  United 
States  upon  written  application  to  the  Bureau  by 
the  enlisted  man  or  by  or  on  behalf  of  a  prospec- 
tive beneficiary.5 

The  status  of  a  divorced  wife  is  interesting  in 
this  connection.  If  she  has  not  remarried,  and  ali- 
mony has  been  decreed  her,  she  has  all  the  rights 
of  a  lawful  spouse  so  far  as  allotments  and  allow- 

8  Sections  201.  204  and  205  of  the  Act 


THE  SOLDIERS'  AXD  SAILORS'  INSURANCE  ACT      271 

ances  are  concerned,  except  that  payments  must 
not  exceed  the  amount  decreed  her  as  alimony  or 
support,  and  if  her  former  husband  has  a  second 
wife  or  children  she  is  only  entitled  to  the  differ- 
ence between  allotments  or  allowances  made  ta 
them  and  half-pay  or  $50,  respectively.  The  rule 
as  to  illegitimate  children  contains  a  similar  limita- 
tion: allotments  and  allowances  are  not  to  exceed 
the  amount  the  father  is  bound  to  pay  under  the 
judicial  decree.6 

To  the  rule  that,  in  "Class  A"  cases,  the  enlisted 
man  is  compelled  to  allot  the  stated  proportion  of 
his  stipend,  there  are  certain  exceptions.  Where 
a  wife  or  former  wife  divorced  consents  to  a  waiver 
of  payments,  and  there  is  evidence  satisfactory  to 
the  Bureau  of  her  ability  to  support  herself  and  the 
children  in  her  custody,  the  allotment  may  be  dis- 
pensed with.  In  the  absence  of  consent  by  the  wife, 
moreover,  exemption  may  be  granted  for  good 
cause  shown,  upon  conditions  prescribed  by  such 
regulations  as  may  be  made.7  Here,  as  in  many 
places  throughout  the  Act,  broad  discretionary 
powers  will  be  seen  to  be  lodged  in  the  Bureau.8 

«  Sees.  201  and  205  of  the  Act 
i  Sec.  201  of  the  Act. 

s  This  feature  is  commented  on  by  W.  F.  Gephart  in  Amer.  Eco- 
nomic Review,  vol.  VII,  p.  197  (March,  1918). 


372      WORKMEN'S  COMPENSATION  AND  INSURANCE 

Voluntary  allotments  the  enlisted  man  is  privi- 
leged to  make  to  any  beneficiary  out  of  any  por- 
tion of  his  pay  remaining  after  the  compulsory 
allotment  is  deducted,  but  this  power  is  subject  to 
such  conditions  and  limitations  as  may  be  imposed 
by  the  Secretaries  of  War  and  of  the  Navy,  re- 
spectively.9 Where  such  allotments  are  actually 
made  by  the  enlisted  man  to  persons  wholly  or 
partly  dependent  on  him,  and  conform  in  amount 
to  certain  stated  regulations,  the  United  States  will 
add  to  them  family  allowances  according  to  the 
following  schedule:  for  one  parent,  $10;  for  two 
parents,  $20;  for  each  grandchild,  brother,  sister, 
and  additional  parent,  $5.  This  schedule  is  the 
same  when  the  person  paying  the  allotment  is  a 
woman  in  the  military  or  naval  service,  as,  for  in- 
stance, a  member  of  the  Army  or  Navy  Nurse 
Corps;  and  in  such  case  there  is  also  a  schedule  of 
family  allowances  for  children:  for  one  child,  $5; 
for  two  children,  $12.50;  $20  for  three;  and  $30  for 
four,  with  $5  per  month  additional  for  each  addi- 
tional child.  All  this  group  of  schedules  consti- 
tutes "Class  B"  of  the  family  allowances.10 

As  has  been  stated,  allowances  in  Class  B  are 
conditional  upon  the  enlisted  man's  making  volun- 

»  Sec.  202  of  the  Act.  10  Sees.  204  and  206  of  the  Act. 


THE  SOLDIERS'  AND  SAILORS'  INSURANCE  ACT      273 

tary  allotments  according  to  certain  regulations 
(though  for  good  cause  shown,  and  under  such 
rules  as  may  be  prescribed,  exemption  from  these 
allotments  as  a  condition  precedent  to  payment  of 
allowances  may  be  granted).11  The  regulations 
are:  that  the  maximum  monthly  allotment  so  re- 
quired shall  be  half -pay;  that  the  minimum,  where 
no  allotments  are  made  to  members  of  Class  A, 
shall  be  $15  per  month;  that  the  minimum,  where 
an  allotment  to  a  member  of  Class  A  is  being  made, 
shall  be  one-seventh  of  pay,  but  not  less  than  $5 
per  month.  The  total  monthly  allowance  paid  to 
members  of  Class  B,  added  to  the  enlisted  man's 
allotment,  is  not  to  exceed  the  amount  habitually 
contributed  by  him  to  their  monthly  support  dur- 
ing the  period  of  dependency  but  not  more  than  a 
year  immediately  preceding  his  enlistment  or  the 
enactment  of  the  Act.  Where  an  allowance  is  paid 
to  members  of  Class  A,  those  in  Class  B  can  not 
receive  more  than  the  difference  between  that  sum 
and  $50.  As  between  the  two  classes,  allotments 
and  family  allowances  are  to  be  apportioned  as  pre- 
scribed by  regulations.12 

A  rather  radical,  but  probably  wise  provision,  is 

11  Sec.  206  of  the  Act. 

12  Sees.  206,  207  and  208  of  the  Act. 


274      WORKMEN'S  COMPENSATION  AND  INSURANCE 

made  for  those  cases  where  allotments  up  to  one- 
half  of  the  enlisted  man's  pay  have  not  been  made. 
The  Secretaries  of  War  and  of  the  Navy,  respec- 
tively, are  empowered  to  require,  under  such  regu- 
lations as  they  may  make,  that  any  proportion  of 
such  one-half  pay  as  is  not  allotted  shall  be  depos- 
ited to  the  credit  of  the  enlisted  man,  at  4  per  cent 
interest,  compounded  semi-annually,  and  be  held 
during  such  period  of  his  service  as  may  be  pre- 
scribed. When  payable  the  money  is  to  be  turned 
over  to  him  if  living,  and  in  case  of  his  death  to 
such  beneficiaries  as  he  may  have  designated,  or 
otherwise  according  to  the  laws  of  intestacy.13  The 
purpose  of  this  section  is  obviously  to  encourage 
thrift  among  the  soldiers  and  sailors.  It  is  an 
heroic  method  to  apply,  as  it  seems  to  be  depriving 
the  enlisted  man  of  the  free  use  of  the  money  he 
has  rightly  earned,  but  it  would  doubtless  be  justi- 
fied by  its  social  results.  Like  the  provisions  for 
compensation  and  insurance  which  we  shall  pres- 
ently discuss,  this  scheme  is  calculated  to  reduce 
that  poverty  and  distress  among  soldiers  and  their 
families  which  has  been  in  the  past  one  of  the  most 
terrible  consequences  of  war.14 

"Sec.  203  of  the  Act. 

"See  article  on  "The  Government  and  the  Soldier's  Family,"  by 


THE  SOLDIERS'  AND  SAILORS'  INSURANCE  ACT      275 

Compensation  for  death  or  disability  is  provided 
l)y  Article  III  of  the  Act.  From  the  point  of  view 
of  our  study,  this  is  the  most  important  of  the  vari- 
ous subdivisions  of  the  general  plan,  and  the  anal- 
ogy to  workmen's  compensation  is  very  close.  The 
public  in  this  case  is  the  ultimate  consumer  who 
profits  by  the  soldier's  activities  in  his  dangerous 
occupation;  and  so  the  public  pays,  in  the  form  of 
taxes,  the  money  necessary  to  assure  compensation 
to  the  disabled  and  to  the  dependents  of  the  slain, 
just  as,  under  the  normal  workmen's  compensation 
act,  the  ultimate  financial  responsibility  is  shoul- 
dered by  the  consumer  in  the  form  of  increased  cost 
of  the  article  he  buys. 

Death  and  disability  "resulting  from  personal 
injury  suffered  or  disease  contracted  in  the  line  of 
duty"  are  made  the  subject  of  compensation  to  be 
paid  by  the  United  States;  but  where  the  victim's 
affliction  was  caused  by  his  own  willful  misconduct, 
compensation  is  denied.  The  schedule  of  monthly 
payments,  where  death  results  from  the  injury,  is 
as  follows :  for  a  widow,  $25 ;  for  a  widow  and  one 
child,  $35;  for  a  widow  and  two  children,  $47.50, 

Samuel  McCune  Lindsay,  in  Review  of  Reviews  for  April,  1918,  for 
an  excellent  discussion  of  the  system  of  allotments  and  allowances 
under  the  Act.  See  also  article  by  Paul  H.  Douglas  in  24  Journ. 
of  Pol.  Econ.,  pp.  461-483  (May,  1918). 


976      WORKMEN'S  COMPENSATION  AND  INSURANCE 

with  $5  for  each  additional  child  up  to  two;  for 
one  child  alone,  $20 ;  for  two  children,  $30 ;  for  three 
children,  $40,  with  $5  for  each  additional  child  up 
to  two;  for  a  widowed  mother,  $20,  with  the  limita- 
tions that  such  payment,  when  added  to  the  total 
amount  payable  to  widow  and  children,  shall  not 
exceed  $75,  and  that  such  payment  can  be  made 
for  the  death  of  one  child  only  and  not  made  at 
all  if  such  widowed  mother  is  already  in  receipt  of 
compensation  for  the  death  of  her  husband.15 

Payment  of  compensation  to  a  widow  or  widowed 
mother  under  the  schedule  just  described  is  until 
death  or  remarriage;  payment  to  children  is  to 
cease  on  attainment  of  the  age  of  eighteen  years  or 
marriage,  unless  the  child  is  permanently  helpless 
owing  to  idiocy,  insanity  or  other  cause.  As  be- 
tween a  widow  and  children  not  in  her  custody,  and 
as  between  children,  the  amount  of  the  compensa- 
tion is  to  be  apportioned  as  prescribed  by  regula- 
tions; "widow"  as  used  in  this  section  being  defined 
not  to  include  one  who  shall  have  married  the  de- 
ceased later  than  ten  years  after  the  time  of  injury. 
Where  any  compensation  payable  under  this  sec- 
tion is  terminated  by  the  happening  of  the  contin- 
gency upon  which  it  is  limited,  the  amount  to  be 

"  Sees.  300.  301  of  the  Act. 


THE  SOLDIERS'  AND  SAILORS'  INSURANCE  ACT      277 

paid  to  remaining  beneficiaries,  if  any,  is  to  be  the 
same  as  would  have  been  payable  had  they  been  the 
sole  original  beneficiaries.  Where  the  deceased's 
death  occurs  after  discharge  or  resignation  from 
service,  the  United  States  is  to  pay  not  in  excess 
of  $100  for  burial  expenses  and  cost  of  transporta- 
tion of  the  body  to  his  home.  Finally,  it  should 
be  noted  that  not  only  "enlisted  men"  but  commis- 
sioned officers  and  female  members  of  the  Army 
and  Navy  Nurse  Corps  on  active  service,  are  en- 
titled to  the  benefits  of  this  and  the  other  sections  of 
the  Act  dealing  with  compensation  for  death  and 
disability.16 

The  schedule  of  payments,  in  cases  where  total 
disability  results  from  the  injury,  is  as  follows:  if 
the  injured  man  has  neither  wife  nor  child  living, 
$30  per  month ;  if  he  has  a  wife  but  no  child,  $45 ; 
a  wife  and  one  child,  $55 ;  a  wife  and  two  children, 
$65;  a  wife  and  three  or  more  children,  $75;  no 
wife  but  one  child,  $40,  with  $10  a  month  for  each 
additional  child  up  to  two;  if  a  widowed  mother 
dependent  on  him  for  support,  $10  in  addition  to 
the  above  amounts.  Where  the  injured  man  is  so 
helpless  as  to  be  in  constant  need  of  a  nurse  or  at- 
tendant, such  additional  sum  up  to  $20  a  month 

10  Ibid. 


-278       WORKMEN'S  COMPENSATION  AND  INSURANCE 

shall  be  paid  as  the  director  shall  deem  reasonable; 
but  if  there  has  been  a  loss  of  both  feet  or  both 
hands  or  both  eyes,  or  the  injured  man  has  become 
totally  blind  or  helplessly  and  permanently  bed- 
ridden from  causes  occurring  in  the  line  of  duty  of 
the  service  of  the  United  States,  compensation  is  to 
be  at  the  rate  of  $100  per  month,  without  allow- 
ance for  nurse  or  attendant.17 

Cases  of  partial  disability  are  compensated  by  a 
percentage  of  the  amount  that  would  be  payable  for 
total  disability,  equal  to  the  degree  of  the  reduction 
in  earning  capacity  resulting  from  the  injury;  but 
no  compensation  is  to  be  paid  for  a  reduction  in 
earning  power  rated  at  less  than  ten  per  cent.  In 
this  connection,  the  Bureau  is  charged  with  the  duty 
of  making  out  a  schedule  of  ratings  of  reductions  in 
earning  capacity  from  specific  injuries  or  combina- 
tions of  injuries  of  a  permanent  nature.  Such  rat- 
ings may  be  as  high  as  100  per  cent;  and  are  to  be 
based  as  far  as  possible  upon  the  average  impair- 
ments of  earning  capacity  resulting  from  similar  in- 
juries in  civil  occupations  and  not  upon  tlie  impair- 
ment of  earning  capacity  in  each  individual  case,  so 
that,  in  the  words  of  the  Act,  "there  shall  be  no  re- 
duction in  the  rate  of  compensation  for  individual 

"Sec.  302  (1)  of  the  Act 


THE  SOLDIERS'  AND  SAILORS'  INSURANCE  ACT      279 

success  in  overcoming  the  handicap  of  a  permanent 
injury."  18  This  latter  provision,  apparently  in- 
serted as  a  safeguard  against  malingering,  also 
serves  to  emphasize  the  fact  that  compensation  un- 
der this  statute  is  to  be  claimed  as  a  matter  of  right, 
and  not  as  ill-disguised  charity. 

In  addition  to  the  compensation  which  we  have 
described,  reasonable  medical,  surgical  and  hospital 
services  are  to  be  furnished  by  the  United  States 
to  the  injured  person;  and  such  artificial  limbs, 
trusses,  and  similar  appliances  as  the  director  may 
deem  useful  and  reasonably  necessary,  will  be  pro- 
vided in  proper  cases.  It  is  required,  however,  that 
every  applicant  for  compensation  shall  submit  him- 
self to  physical  examination  whenever  requested  to 
do  so  by  the  authorities ;  and  failure  to  present  him- 
self for  or  any  attempt  to  obstruct  such  examination 
will  be  penalized  by  the  suspension  of  awards.  Ap- 
plicants must  also  submit  to  any  reasonable  medical 
or  surgical  treatment  furnished  by  the  Bureau  at 
the  Bureau's  request ;  and  the  consequences  of  un- 
reasonable failure  so  to  do  are  not  to  be  deemed 
to  result  from  the  injury  for  which  compensation 
is  awarded.19 

The  class  of  cases  in  which  it  is  expressly  provided 

"  Sec.  303  (2)  of  the  Act.      i»  Sees.  302,  303  of  the  Act 


280      WORKMEN'S  COMPENSATION  AND  INSURANCE 

that  no  compensation  shall  be  payable,  is  large  and 
is  covered  by  several  sections  of  the  Act.  Thus, 
for  death  inflicted  (otherwise  than  by  the  enemy) 
as  a  lawful  punishment  for  a  crime  or  military  of- 
fense, no  award  is  made.20  A  dismissal  or  dishon- 
orable or  bad  conduct  discharge  bars  recovery  of 
compensation.21  Where  death  in  the  service  is  not 
officially  recorded  in  the  department  under  which 
the  deceased  was  serving,  no  award  will  be  made; 
and  this  operates  to  bar  payments  for  a  period  dur- 
ing which  the  man  was  reported  "missing"  and  a 
family  allowance  was  paid  for  him.22  Where  death 
or  disability  does  not  occur  prior  to  or  within  one 
year  after  discharge  or  resignation  from  the  service, 
no  compensation  is  payable;  except  that,  where  a 
medical  examination,  made  pursuant  to  regulations 
at  the  time  of  discharge  or  resignation  or  within  a 
reasonable  time  not  in  excess  of  one  year  thereafter, 
results  in  the  issuance  of  a  certificate  by  the  director 
to  the  effect  that  the  injured  person  on  discharge 
or  resignation  was  suffering  from  injury  likely  to 
result  in  death  or  disability,  compensation  for  death 
or  disability  actually  so  resulting  will  be  paid.23 
A  sort  of  statute  of  limitations  is  created  by  the 

20  Sec.  308  of  the  Act  22  Sec.  307  of  the  Act 

*i  Ibid.  28  Sec.  306  of  the  Act 


THE  SOLDIERS'  AND  SAILORS'  INSURANCE  ACT      281 

section  of  the  Act  providing  that  no  awards  will  be 
made  unless  claim  therefor  is  filed  within  five  years 
from  resignation  or  discharge  from  or  death  in 
the  service,  with  the  exception  that,  in  the  case  of 
compensable  death  or  disability  occurring  subse- 
quent to  resignation  or  discharge,  the  five  years  is 
to  run  from  the  commencement  of  such  disability 
or  the  occurrence  of  such  death.  The  director, 
however,  may  extend  these  periods  for  not  more 
than  one  year,  in  his  discretion;  and  where  the 
claimant  is  a  minor  or  of  unsound  mind  or  phys- 
ically unable  to  make  a  claim,  the  five-year  period 
dates  from  the  termination  of  such  disability.24 
Compensation  is  never  to  be  paid  for  a  term  greater 
than  two  years  prior  to  the  claim,  nor  will  increases 
be  awarded  to  revert  back  more  than  one  year  prior 
thereto.25  The  power  of  the  Bureau  at  any  time 
to  review  awards,  and  to  terminate,  diminish,  or 
increase  them,  or  grant  compensation  where  it  has 
been  refused  or  discontinued,  is  practically  unlim- 
ited.26 

Certain  other  of  the  provisions  of  this  part  of  the 
Act  must  be  briefly  stated.  Compensation  is  not 
assignable,  and  is  exempt  from  attachment,  execu- 

24  Sec.  309  of  the  Act  20  Sec.  305  of  the  Act. 

SB  Sec.  310  of  the  Act 


283      WORKMEN'S  COMPENSATION  AND  INSURANCE 

tion  and  all  taxation.27  Awards  will  not  be  made 
while  a  person  is  in  receipt  of  service  or  retirement 
pay,  and  existing  laws  providing  for  pensions,  gra- 
tuities, or  payments  in  the  event  of  death,  are  to 
have  no  prospective  operation.28  Compensation 
under  this  Act  for  disability  or  death  of  women  in 
the  Army  or  Navy  Nurse  Corps  is  to  be  in  lieu  of 
payments  under  the  Federal  Workmen's  Compen- 
sation Law.29  Where  injury  or  death  of  one  en- 
titled to  be  a  beneficiary  under  this  Act  is  so  caused 
as  to  create  a  liability  in  some  party  other  than 
the  United  States  or  the  enemy  to  answer  in  dam- 
ages therefor,  the  beneficiary  must  assign  his  claim 
to  the  United  States,  to  be  prosecuted  or  compro- 
mised by  the  director  and  the  money  placed  to  the 
credit  of  the  compensation  fund.30  A  pension  for 
widows  of  veterans  of  former  wars  is  provided.30* 

One  feature  on  which  we  have  not  yet  touched, 
despite  its  close  relationship  to  the  compensation 
provisions,  is  the  section  providing  for  vocational 
training  and  rehabilitation.  Of  all  the  many  wise 
and  fore-thoughted  ideas  embodied  in  the  Soldiers' 
and  Sailors'  Insurance  Act,  this  is  perhaps  the  most 
remarkable.  It  states,  in  substance,  that  in  cases 


.  311  of  the  Act.  »oSec.  313  of  the  Act 

zs  Sec.  31-2  of  the  Act.  soa  Sec.  314  of  the  Act. 

2»  Ibid, 


THE  SOLDIERS'  AND  SAILORS'  INSURANCE  ACT      283 

of  dismemberment,  loss  of  sight  or  hearing,  or  other 
injury  causing  permanent  disability,  the  injured 
person  is  to  follow  such  course  of  "  rehabilitation, 
reeducation,  and  vocational  training  as  the  United 
States  may  provide  or  procure  to  be  provided." 
Where  taking  such  a  course  prevents  the  injured 
man  from  earning  his  living  meanwhile,  he  may  be 
brought  back  into  the  military  or  naval  service  un- 
der a  form  of  enlistment  which  entitles  him  to  full 
pay  as  of  the  last  month  of  his  active  service,  and 
his  family  to  corresponding  allotments  and  allow- 
ances, in  lieu  of  all  other  compensation.  Where 
there  is  willful  failure  to  follow  the  course  pre- 
scribed or  to  enlist,  compensation  payments  are  to 
be  suspended  until  such  willful  failure  ceases,  and 
no  awards  will  be  made  for  the  intervening  period.3 1 
At  the  present  writing,  Congress  is  being  be- 
sieged with  proposed  amendments  to  this  section, 
designed  to  place  the  administration  of  its  pro- 
visions under  the  Federal  Board  for  Vocational  Ed- 
ucation or  other  body,  or  to  insert  some  new  require- 
ment, limitation  or  benefit.32  By  the  time  this  book 

«i  Sec.  304  of  the  Act 

82  As  this  goes  to  press,  news  comes  of  the  passage  of  an  act 
to  place  vocational  rehabilitation  under  the  Federal  Board  for  Vo- 
cational Education.  Public,  No.  178,  65th  Congress  (approved  June 
,27,  1918).  See  comment  in  The  Vocational  Summary,  vol.  1,  No.  2 
(June,  1918). 


284      WORKMEN'S  COMPENSATION  AND  INSURANCE 

emerges  from  the  press  substantial  changes  will  un- 
doubtedly have  been  wrought  in  the  administrative 
features  of  the  scheme ;  but  it  may  be  asserted  with 
confidence  that  no  less  intelligent  and  humane  plan 
will  be  substituted,  if  the  public  is  given  a  fair 
chance  to  judge  of  the  far-sightedness  as  well  as 
beneficence  of  this  bit  of  modern  social  legislation. 
The  world  is  already  so  familiar  with  the  exten- 
sive work  being  done  in  England  in  training  the 
blind  and  other  war  cripples  that  the  mere  introduc- 
tion into  this  country  of  like  salutary  measures  to 
deal  with  the  problem  of  the  disabled  is  no  cause 
for  surprise.  We  have,  however,  reason  for  self- 
congratulation  in  the  promptness  with  which  the 
unfortunate  contingency  was  foreseen,  and,  above 
all,  with  the  centralized  control  of  relief  and  edu- 
cative measures  which  the  Soldiers'  and  Sailors* 
Insurance  Act  has  introduced.  If  the  problem  of 
rehabilitation  were  left  to  irresponsible  private 
agencies,  no  matter  how  philanthropic  and  well- 
meaning,  inequality  and  inefficiency  would  have 
been  sure  to  follow.  Moreover,  the  problem  of  the 
disabled  of  a  war  is  a  national  problem,  if  there  ever 
was  one;  and  it  is  to  the  public  interest  that  full  con- 
trol over  the  administration  of  the  measures  under- 
taken for  its  solution  should  be  lodged  in  the  central 


THE  SOLDIERS'  AND  SAILORS'  INSURANCE  ACT      285 

government.  As  a  people,  we  must  work  out  our 
salvation  together,  shouldering  alike  the  financial 
burdens  and  the  responsibility  for  success. 

Some  of  the  reasons  for  the  need  of  vocational 
reeducation  for  disabled  soldiers  and  sailors  are 
outlined  in  a  recent  periodical.  Such  training  is 
said  to  be  required  to  insure  the  economic  inde- 
pendence of  these  men;  to  conserve  trade  skill;  to 
insure  national  rehabilitation;  to  avoid  vocational 
regeneration,  or  lapse  into  a  state  of  chronic  de- 
pendence and  lack  of  ambition ;  to  prevent  exploita- 
tion of  these  unfortunates  by  the  unscrupulous;  to 
adjust  the  supply  of  labor  to  the  demand ;  to  develop 
new  vocational  efficiency.83  All  these  purposes  are 
best  promoted  by  a  highly  centralized  administra- 
tion, which  can  determine  the  precise  needs  of  indus- 
try for  skilled  labor,  and  then  undertake  to  fill  those 
needs  by  training  the  proper  number  of  men  to  do 
the  sort  of  work  required.  Centralization  we  will 
have  under  the  wise  provision  of  our  Act,  which 
leaves  the  problem,  as  it  should  be  left,  in  the  hands 
of  the  Federal  Government. 

We  have  already  described  the  provisions  for 
allotments  and  allowances,  compensation,  and  vo- 
cational education,  contained  in  the  Act  with  which 

38  The  Vocational  Summary,  vol.  I,  no.  1,  p.  5  (May,  1918). 


286      WORKMEN'S  COMPENSATION  AND  INSURANCE 

this  chapter  deals.  There  remains  the  feature 
which  has  attracted  the  most  widespread  attention 
— a  scheme  for  voluntary  insurance  of  men  and 
women  in  the  active  military  and  naval  service  at 

•f 

ordinary  peace  time  rates,  in  an  institution  operated 
and  financed  by  the  Government.  It  is  the  most  gi- 
gantic experiment  in  state  insurance  yet  attempted, 
and  one  of  the  boldest;  for  the  United  States  prac- 
tically carries  the  entire  additional  war  risk  by  way 
of  gift  to  those  who  are  fighting  its  battles. 

Like  all  social  legislation,  the  insurance  scheme 
of  our  Act  has  two  aspects:  the  philanthropic  and 
the  practical.  It  has  been  the  custom  of  writers, 
rather  unfortunately  I  believe,  to  harp  upon  the 
insolvency  of  War  Risk  Insurance,  and  to  advance 
the  doctrine  that  it  is  only  right  and  proper  for  a 
nation  in  time  of  war  to  scorn  the  dictates  of  busi- 
ness judgment  and  heap  benefits  upon  those  who 
fight  to  preserve  it,  regardless  of  cost.84  Whether 
or  not  it  is  ever  desirable  for  governments  to  be  so 
purely  sentimental,  it  seems  clear  that  the  United 
States  was  actuated  by  more  practical  motives  when 
it  instituted  the  scheme  of  insurance  for  its  war- 

s*  See  American  Economic  Review,  vol.  VII,  p.  202  (March,  1918). 
Here  Mr.  Gephart  seems  to  be  invoking  patriotism  and  philanthropy 
to  excuse  business  defects. 


THE  SOLDIERS'  AND  SAILORS'  INSURANCE  ACT      287 

riors  now  under  discussion.  That  scheme  in  opera- 
tion is  a  measure  of  justice  to  the  dependents  of 
those  who  die  in  the  service;  but  justice,  like  hon- 
esty, is  often  also  the  best  policy,  and  the  United 
States  does  not  stand  to  lose  by  the  generous  oppor- 
tunities it  offers  to  its  soldiers  and  sailors  to  insure 
themselves  at  low  rates.  It  is  true  that  the  pre- 
miums collected  will  in  all  probability  be  wholly  in- 
sufficient to  defray  the  sums  that  must  be  paid  out 
in  claims  and  for  overhead;  but  it  should  not  be 
forgotten  that  the  voluntary  insurance  offered  by 
the  United  States  is  intended  in  large  degree  to  be 
in  lieu  of  pensions.  If  the  completely  disabled  sol- 
dier, and  the  widow  and  dependents  of  him  who  died 
in  service,  can  be  removed  from  the  pension  lists  by 
reason  of  the  provision  made  in  their  behalf  through 
insurance,  an  enormous  financial  burden  will  be 
lifted  from  the  Government,  enough  to  compensate 
at  least  in  part  for  the  losses  it  will  incur  in  conduct- 
ing War  Risk  Insurance  as  a  business.  The  in- 
sured at  least  pays  premiums;  the  pensioner  does 
not.  In  the  long  run  the  Government  should  be 
the  gainer.  If  a  grateful  posterity,  not  satisfied 
with  a  system  which  will  have  made  the  families  of 
veterans  of  the  Great  War  secure  from  want,  insists 
on  pensioning  them  lavishly  nevertheless,  War  Risk 


B88      WORKMEN'S  COMPENSATION  AND  INSURANCE 

Insurance  will  have  failed  in  its  purpose  of  prevent- 
ing a  repetition  of  the  scandalous  expenditure  and 
irrational  distribution  of  favors  which  have  made  the 
name  of  "pension"  odious  in  our  time;  but  this,  like 
other  economic  problems  projected  into  the  future, 
must  be  left  for  its  solution  to  the  wisdom  and  sense 
of  justice  of  the  coming  generation.  We  will  have 
laid  at  least  a  sound  foundation,  according  to  our 
lights. 

The  insurance  provisions  of  our  Act  are  con- 
tained in  Sections  400  to  404,  inclusive.  It  is  first 
provided  that  in  order  to  give  to  all  commissioned 
officers  and  enlisted  men  and  to  female  members 
of  the  Army  and  Navy  Nurse  Corps  employed  in 
active  service  "greater  protection  for  themselves 
and  their  dependents  than  is  provided  in  Article 
III"  (the  compensation  article) ,  the  United  States, 
"upon  application  to  the  bureau  and  without  med- 
ical examination"  will  grant  insurance  against  death 
or  total  permanent  disability  in  any  multiple  of 
$500,  but  not  less  than  $1,000  or  more  than  $10,000, 
upon  payment  of  the  prescribed  premiums.35  In- 
surance must  be  applied  for  within  120  days  after 
enlistment  or  entrance  into  and  employment  in  the 
active  service  and  before  discharge  or  resignation; 

*s  Sec.  400  of  the  Act 


THE  SOLDIERS'  AND  SAILORS'  INSURANCE  ACT      289 

except  that  "those  persons  who  are  in  the  active 
war  service  at  the  time  of  the  publication  of  the 
terms  and  conditions  of  such  contract  of  insurance," 
and  remain  so,  may  apply  at  any  time  within  120 
days  thereafter.36  Automatic  coverage  of  a  sort  is 
provided  for  those  persons  in  the  service  on  or  after 
April  6,  1917,  who  become  or  have  become  totally 
and  permanently  disabled  or  die  within  .120  days 
after  publication  as  stated  above,  without  having 
made  the  proper  application.  Such  a  person  is 
deemed  to  have  applied  for  and  been  granted  insur- 
ance, and  payments  of  $25  per  month  are  to  be 
made  to  him  during  life,  or  in  case  of  death  before 
receiving  any  or  as  many  as  two  hundred  and  forty 
of  such  installments,  to  his  wife  from  the  time  of  his 
death  and  during  her  widowhood,  or  to  his  child,  or 
widowed  mother  while  they  survive  him.  In  no 
case,  however,  are  more  than  two  hundred  and  forty 
monthly  installments  to  be  paid.87 

The  peculiar  features  of  the  war  risk  insurance 
policy  are  set  forth  with  some  particularity  in  Sec- 
tion 402  of  the  Act.  The  director,  subject  to  the 
general  supervision  of  the  Secretary  of  the  Treas- 
ury, is  allowed  wide  latitude  in  settling  the  exact; 
terms  and  conditions  of  the  contract.  The  insur- 

«6  Sec.  401  of  the  Act  **  Ibid. 


290      WORKMEN'S  COMPENSATION  AND  INSURANCE 

ance  is  not  assignable,  nor  subject  to  the  claims  of, 
the  creditors  either  of  the  insured  or  the  beneficiary. 
It  is  payable  only  to  a  spouse,  child,  grandchild* 
brother  or  sister,  or  to  the  insured  during  total  and 
permanent  disability.  Ordinarily  it  will  be  paid  iri 
two  hundred  and  forty  monthly  installments;  but 
provisions  for  maturity  at  certain  ages,  continuous 
installments  during  the  life  of  the  insured  or  the 
beneficiaries,  for  cash,  loan,  paid  up  and  extended 
values,  and  other  provisions  proving  reasonable  and 
practicable,  may  be  provided  for  in  the  contract,  or 
from  time  to  time  by  regulations.  Where  there  is 
no  surviving  duly  designated  beneficiary  within  the 
permitted  class,  the  money  is  to  be  distributed 
among  such  members  of  that  class  as  would  be  en- 
titled to  the  deceased's  personal  property  under  the 
laws  of  intestacy ;  and  if  no  such  person  survive  the 
insured,  the  latter's  estate  is  to  be  credited  with  the 
amount  of  the  reserve  value  of  the  insurance  at  the 
time  of  his  death,  calculated  in  the  manner  already; 
provided  for. 

As  we  have  already  stated  in  these  pages,  the 
excess  mortality  and  disability  cost  resulting  from 
the  hazards. of  war  is  to  be  borne  by  the  United 
States ;  and  the  same  is  true  of  the  expenses  of  ad- 
ministration. This  result  is  assured  by  the  iron- 


THE  SOLDIERS'  AND  SAILORS'  INSURANCE  ACT      291 

'bound  provision  that  the  premium  rates  charged 
are  to  be  the  net  rates  based  upon  the  American 
Experience  Table  of  Mortality  and  interest  at  three 
and  one-half  per  cent.38 

One  of  the  most  bitterly  criticized  provisions  of 
the  whole  Act  is  that  which  permits  the  continuance 
;after  the  war  of  the  policies  taken  out  during  the 
period  of  hostilities.  Many  who  loyally  support 
the  Government's  interference  in  private  business 
as  an  emergency  measure  are  bitter  against  what 
they  deem  to  be  the  first  step  towards  the  perma- 
nent establishment  of  state-managed  life  insur- 
ance.89 The  much-debated  Section  provides,  in  a 
few  words,  that  during  the  war,  and  thereafter  un- 
til converted,  policies  shall  be  term  insurance  for 
successive  terms  of  one  year  each;  but,  not  less 
than  five  years  after  the  end  of  the  war,  this  insur- 
ance is  to  be  converted,  without  medical  examina- 
tion, into  such  form  or  forms  as  the  insured  may 
request  and  regulations  may  prescribe.  These  reg- 
ulations, moreover,  must  provide  for  the  right  to 
convert  into  ordinary  life,  twenty-payment  life, 
endowment  maturing  at  age  sixty-two,  and  other 

as  Sec.  403  of  the  Act. 

s9  See,  for  instance,  the  outraged  protest  of  Arthur  Richmond 
Marsh,  in  The  Economic  World,  New  Series,  vol.  XV,  p.  344  (Mar. 
9,  1918). 


B93      WORKMEN'S  COMPENSATION  AND  INSURANCE 

usual  forms,  and  shall  prescribe  the  time  and 
method  of  payment  of  premiums ;  but  advance  pay- 
paents  are  not  to  be  required  for  periods  of  more 
[than  one  month  each,  and  may  be  deducted  from  the 
pay  or  deposit  of  the  insured  or  otherwise  made  at 
jhis  election.40 

Enforcement  by  suit,  in  case  of  disagreement 
between  the  bureau  and  any  beneficiary  or  bene- 
ficiaries as  to  a  claim  under  one  of  these  war  risk 
insurance  contracts,  was  provided  for  by  Section 
1405  of  the  Act  as  originally  passed.  This  section 
[was  repealed  by  a  law  of  May  20,  1918,  which  sub- 
jstituted  an  amendment  to  Section  13  of  the  Act  as 
originally  passed,  materially  limiting  the  amount  of 
compensation  which  attorneys  and  claim  agents 
may  receive.  The  new  provision  restricts  the  fee 
which  may  be  charged  for  assisting  a  claimant  in  the 
preparation  of  his  papers  to  three  dollars ;  and  when 
the  applicant  and  the  bureau  disagree  on  the 
amount  payable,  and  suit  is  brought  in  the  United 
States  District  Court,  the  former's  attorney  cannot 
claim  more  than  5%  of  the  amount  recovered. 
The  asking  or  receiving  of  any  other  compensation 
in  respect  to  the  action  by  the  attorney  or  claim 

*o  Sec.  404  of  the  Act. 


THE  SOLDIERS'  AND  SAILORS'  INSURANCE  ACT      293 

agent  is  not  only  made  unlawful,  but  those  who 
secure  or  attempt  to  secure  fees  not  prescribed  are 
liable  to  a  $500  fine  or  two  years'  imprisonment,  or 
both.40a 

Some  of  the  controversies  to  which  Soldiers'  and 
Sailors'  Insurance  has  already  given  rise  have  been 
adverted  to.  The  fear  often  expressed,  that  the 
new  scheme  is  the  entering  wedge  of  Government 
monopoly  of  the  entire  insurance  business,  may  or 
may  not  be  well  founded ;  but  the  great  and  obvious 
desirability  of  having  the  policy  taken  out  in  war 
time  form  the  basis  of  a  permanent  provision  for 
that  future  which  service  in  the  armed  forces 
renders  especially  uncertain  because  of  present 
or  potential  disabilities  acquired,  has  very  prop- 
erly overridden  the  objections  of  selfish  con- 
servatism. It  has  been  suggested  that  free  cover- 
age of  all  up  to  a  certain  sum  would  not  only  have 
been  in  keeping  with  the  liberal  policy  of  the  Gov- 
ernment, but  would  more  surely  render  unnecessary 
a  resort  to  pensions  after  the  war,  by  taking  care  of 
the  rare  instance  where  a  soldier  or  sailor  refuses  to 
insure  himself.41  The  answer  to  this  criticism  is 

<oa  Public,  No.  151,  65th  Congress  (May  20,  1918). 

*i  Such  a  suggestion  was  made,  it  seems,  by  the  life  underwriters 
of  the  country.  The  Weekly  Underwriter,  vol.  XCVIII,  p.  34  (Jan. 
12,  1918). 


294      WORKMEN'S  COMPENSATION  AND  INSURANCE 

twofold :  first,  the  number  of  Army  and  Navy  men 
who  have  not  taken  out  policies  is  negligible: 42  and 
secondly,  these  unusual  cases  may  be  provided  for, 
at  least  in  part,  by  the  power  given  to  the  Secre- 
taries of  War  and  of  the  Navy  to  compel  the  deposit 
to  the  enlisted  man's  credit  of  such  portions  of  one- 
half  of  his  pay  as  are  not  expended  in  allotments.43 
The  Act  as  originally  drawn  contemplated  appli- 
cations for  insurance  only  by  the  insured.  This 
meant  that  the  purpose  of  the  whole  scheme  could 
be  defeated,  so  far  as  the  individual  case  was  con- 
cerned, by  the  selfishness  of  a  soldier  who  preferred 
a  little  extra  spending  money  to  the  righteous  satis- 
faction of  leaving  his  family  well  provided  for  in 
case  of  his  death.  This  defect  in  the  law  was  early 
seized  upon  by  the  critics;  and  Congress  has  now 
amended  the  original  statute  to  permit  of  persons 
other  than  the  insured  applying  for  policies.44  The 
beneficiaries  remain  restricted  as  before;  and  the 

« According  to  figures  issued  in  March  by  the  Secretary  of  the 
Treasury,  over  90  per  cent  of  the  United  States  Army,  here  and 
abroad,  have  taken  out  insurance  with  the  bureau.  Official  Bulletin, 
Mar.  18,  1918. 

«  See  Sec.  203  of  the  Act. 

"See  Weekly  Underwriter,  vol.  XCVIII,  p.  381  (March  23,  1918), 
for  editorial  comment  on  the  change  effected  in  the  Act  by  the 
Amendment,  the  increase  in  the  number  of  policies  which  will  result, 
and  the  opportunity  for  patriotic  service  on  the  part  of  life  insurance 
men  in  aiding  the  scheme  as  expanded. 


THE  SOLDIERS'  AND  SAILORS'  INSURANCE  ACT      295 

amendment  takes  its  place  as  a  worthy  part  of  the 
general  plan  to  provide  so  generously  for  fighting 
men  and  their  families  as  to  render  extensive  pen- 
sion legislation  unnecessary. 


CHAPTER  IX 

REQUISITES  OF  THE  IDEAL  LAW 

THE  many  disadvantages  of  our  state  system,  with 
the  grotesque  discrepancies  between  the  fundamen- 
tals and  commonplaces  alike  of  the  law  of  adjoin- 
ing jurisdictions  to  which  it  gives  rise,  are  suffi- 
ciently obvious.  But  when  legislation  of  a  new 
type  is  afoot,  our  little  commonwealths  within  a 
great  commonwealth  furnish  an  ideal  stamping- 
ground,  an  experimental  field  where  all  the  varia- 
tions and  modifications  of  the  novel  principle  can  be 
tried  and  studied,  with  a  view  to  determining  the 
ideal  form  which  such  legislation  should  take. 
These  experiments  are  costly,  but,  if  conducted  and 
compared  with  intelligence,  will  help  to  substitute 
for  guesswork  something  like  scientific  accuracy. 

This  country  has  now  witnessed  nearly  eight 
years  of  experiments  in  workmen's  compensation. 
In  that  time,  almost  every  conceivable  variation 
of  the  principle  has  been  attempted,  from  elective 
compensation  acts  applicable  to  a  few  employments 

296 


REQUISITES  OF  THE  IDEAL  LAW  297 

to  compulsory  state  insurance  laws  covering  prac- 
tically all.  The  desire  for  uniformity,  and  more 
particularly  for  uniform  accuracy  is  keenly  felt ; 1 
and  now  that  our  legislators  have  had  the  benefit  of 
several  years  of  American  and  many  of  foreign  ex- 
perience, it  would  seem  that  they  should  be  in  a 
position  to  gratify  it. 

That  admirable  body  of  public-spirited  men,  the 
Commissioners  on  Uniform  State  Laws,  have  un- 
dertaken to  draft  a  Uniform  Workmen's  Compen- 
sation act,  the  adoption  of  which  they  have  urged 
on  all  the  states,  and  which  was  enacted  into  law  in 
1915  in  the  Territory  of  Hawaii,  and,  with  some 
modifications,  in  Vermont.2  The  plan  provides  for 
compulsory  compensation,  with  either  insurance  or 
security,  but  with  no  State  insurance.  As  so  out- 
lined, I  do  not  wholly  agree  to  it,  and  in  the  fol- 
lowing pages  I  will  endeavor  to  indicate  what  I 
conceive  to  be  the  requisites  of  an  ideally  adequate 
and  comprehensive  law  which  might  be  enacted  in 
all  jurisdictions  throughout  the  United  States. 

The  model  statute  should,  first  of  all,  be  compul- 
sory. At  this  stage  of  the  development  of  the  com- 

1  W.  C.  Fisher  in  Amer.  Economic  Review,  vol.  V,  p.  226   (June, 
1915). 

2  Hawaii  Acts  1915,  No.  221;  Vt.  Acts  1915,  c.  164,  as  amended  by 
Acts  1917,  c.  171,  173,  176. 


298      WORKMEN'S  COMPENSATION  AND  INSURANCE 

pensation  principle,  it  is  almost  universally  con- 
ceded that  such  laws  should  be  compulsory,  and  that 
the  only  reason  for  making  them  elective  in  form 
has  been  to  avoid  possible  constitutional  objections.3 
As  we  have  seen,  state  legislatures  imbued  with  the 
spirit  of  progress,  but  restrained  by  a  craven  fear 
of  having  their  enactments  overthrown  by  the 
courts,  have  endeavored,  by  raising  presumptions  of 
acceptance  and  by  other  means,  to  make  nominally 
elective  laws  compulsory  in  fact ;  these  are  disgrace- 
ful subterfuges,  and  inexcusable  in  this  day  and 
age.  If  constitutional  provisions  are  so  antiquated 
or  inelastic  as  to  stand  in  the  way  of  needed  labor 
legislation,  they  should  go ;  the  path  of  amendment 
is  open  to  all,  and  has  been  availed  of  in  many 
states.  The  elective  method  is  needlessly  compli- 
cated and  cumbersome  in  operation;  compulsory 
laws  are  simpler,  more  intelligible,  less  expensive  to 
administer,  and  more  just  because  more  uniform 
and  certain. 

The  field  of  compensation  should  be  as  broad  as 
possible.  It  is  hard  to  see  on  what  principle  the 
exception  of  any  employment  in  which  an  industrial 
accident  may  happen  can  be  supported.  Certainly 

s  Lewis  C.  Williams  in  Case  and  Comment,  vol.  22,  p.  296  (Septem- 
ber, 1915). 


REQUISITES  OF  THE  IDEAL  LAW  299 

the  restriction  of  a  compensation  statute  to  "extra- 
hazardous"  employments  has  no  foundation  in  rea- 
son; for  the  workman  who  is  injured  by  a  rare  acci- 
dent suffers  just  as  much,  and  he  and  his  depend- 
ents are  as  likely  to  become  a  charge  on  the  com- 
munity, as  one  who  falls  a  prey  to  a  more  common 
mishap.  There  was  an  economic  reason,  to  be  sure, 
for  the  early  restriction  of  compensation  to  extra- 
hazardous  employments,  for  it  was  there  that  the 
pressure  of  resulting  poverty  first  began  to  be  felt ; 
but  from  the  beginning  this  was  a  compromise,  and 
it  is  one  which  can  hardly  be  defended  now. 

Various  state  statutes  have  excluded  casual  work- 
ers, outworkers,  public  employees,  and  those  draw- 
ing a  salary  of  more  than  a  certain  amount  a  year. 
These  restrictions,  too,  are  illogical  and  often  un- 
just. In  the  case  of  Joseph  C.  Gaynor,  referred 
to  elsewhere  in  this  volume,  the  widow  of  a  waiter 
who  was  killed  by  an  accident  arising  out  of  and  in 
the  course  of  his  employment,  was  not  permitted 
to  recover  compensation  under  the  Massachusetts 
statute  because  he  was  technically  a  casual  em- 
ployee, hired  by  the  job,  though  his  employer  al- 
ways engaged  him  that  way.4  This  result  was 
cruelly  unjust;  but  such  a  situation  is  not  uncom- 

*  Joseph  C.  Gaynor's  Case,  217  Mass.  86. 


300      WORKMEN'S  COMPENSATION  AND  INSURANCE 

mon  where  the  rule  as  to  casual  employees  is  in 
effect. 

Outworkers — those  who  do  the  employer's  work 
in  their  own  homes,  such  as  laundresses, — are  not 
covered  by  many  of  our  statutes.  This  exclusion 
"implies  a  retention  of  some  part  of  the  old  doctrine 
of  liability  as  conditioned  upon  personal  fault," 5 
and  is  indefensible  in  a  workman's  compensation 
law.  Distinctions  on  the  basis  of  earnings  fail  to 
meet  with  the  approval  of  those  of  us  who  believe 
that  compensation  awards  are  part  of  the  just  re- 
turn for  services  rendered;  the  fact  that  a  man  is 
making  a  comfortable  salary  before  injury  will 
make  his  case  less  imperative  than  that  of  a  laborer 
barely  able  to  live  on  his  wages,  but  it  should  not 
deprive  him  of  his  right  under  an  adequate  law. 
Public  employees  should  be  included,  since  the  pub- 
lic ought  to  be  a  model  employer.6  And  the  ex- 
clusion of  those  not  serving  in  the  master's  trade  or 
business — a  class  embracing  college  professors,  min- 
isters, men  engaged  to  do  interior  decorating  or 
some  such  service  of  luxury  for  a  private  house- 
holder— needs  but  to  be  mentioned  to  be  shown 
arbitrary  and  absurd.  In  short,  I  am  fully  con- 

»W.  C.  Fisher  in  Amer.  Economic  Review,  voL  V,  p.  242  (June, 
1915). 
« Ibid.,  p.  240. 


REQUISITES  OF  THE  IDEAL  LAW  301 

vinced  that  only  a  law  covering  all  employments, 
for  what  purpose  soever,  will  give  permanent  satis- 
faction.68 

The  injuries  covered  should  be  all  those  directly 
or  indirectly  due  to  the  employment.  This  should 
include  the  entire  field  of  industrial  accidents  so- 
called,  and  in  addition  disease  traceable  to  the  na- 
ture of  the  occupation.  I  am  not  prepared  to  say 
that  we  should  go  the  whole  length  of  the  German 
plan  in  compelling  insurance  against  all  sickness, 
invalidity  and  old  age.  Such  a  measure,  passed  by 
Congress  and  applicable  not  merely  to  employees 
but  to  the  entire  population,  might  be  one  way  of 
eradicating  the  "deserving  poor" ;  but  I  do  not  think 
it  advisable  or  just  to  lay  upon  employers  the  bur- 
den of  supporting  victims  of  all  mortal  ills  simply 
because  they  happen  to  be  employees. 

Conditions  of  forfeiture  present  a  perplexing 
question.  On  the  one  hand,  we  have  the  settled 
principle  that  under  workmen's  compensation  laws 
negligence  of  the  employee  is  immaterial;  and  on 
the  other,  the  apparent  injustice  of  mulcting  the 
employer  where  that  negligence  was  gross  and  in- 
excusable. Practical  considerations,  however,  de- 

«» "A  perfect  scheme  of  compensation  should  cover  all  employ- 
ments without  exception."  Blanchard,  Liability  and  Compensation 
Insurance,  p.  109. 


302      WORKMEN'S  COMPENSATION  AND  INSURANCE 

termine  the  matter  in  favor  of  awarding  compensa- 
tion even  in  such  cases ;  for  gross  carelessness  on  the 
part  of  the  workman  where  his  own  safety  is  con- 
cerned is  so  exceptional  as  not  to  constitute  a  serious 
problem;  and  the  litigation  in  which  we  would  at 
once  be  plunged  as  soon  as  we  began  to  consider 
degrees  of  negligence  would  defeat  one  of  the  prin- 
cipal aims  of  the  compensation  system — to  diminish 
the  cost  of  determining  questions  of  liability  for  in- 
dustrial injuries. 

Clearly,  however,  the  ideal  law  would  not  permit 
a  workman  to  recover  from  his  employer  for  self- 
inflicted  injuries.  Pity  for  the  man's  family  and 
dependents  may  be  aroused  in  such  a  case ;  but  I  am 
afraid  that  in  an  instance  of  this  sort  they  must  be 
left  to  suffer.  Examples  of  this  kind  of  depravity 
among  workingmen  are  fortunately  rare ;  but  to  en- 
courage it  by  granting  compensation  in  such  cases 
is  unthinkable,  either  from  an  economic  or  a  moral 
point  of  view.  The  tribunal  administering  the  law 
should  insist,  of  course,  that  proof  of  the  self- 
infliction  of  an  injury  should  be  clear  and  un- 
equivocal. 

Considerations  of  public  policy  are  not  so  imper- 
ative, however,  in  the  case  of  intoxication.  So  long 
as  the  law  sees  fit  to  permit  the  sale  of  liquor  in 


REQUISITES  OF  THE  IDEAL  LAW  303 

public-houses,  workingmen  will  be  subjected  to 
what  is  commonly  called  temptation,  but  which  is 
more  often  infection.  For  alcoholism  is  a  disease, 
and  those  especially  susceptible  to  it  are  more  to 
be  pitied  than  scorned.  Excluding  intoxicated 
workmen  from  compensation  benefits  might  have 
some  slight  effect  in  diminishing  drunkenness, 
though  it  is  a  very  indirect  and  uncertain  way  of 
accomplishing  that  end;  but  on  the  other  hand  it 
would  work  some  hardship  on  the  weak  but  not  vi- 
cious drinker,  and  a  very  great  injustice  on  his  help- 
less dependents.  On  the  whole,  I  think  intoxication 
of  the  injured  workman  should  not  operate  to  bar 
his  claim  to  compensation;  and  only  for  self-in- 
flicted injury  should  forfeiture  be  provided. 

The  purpose  of  the  "waiting  period,"  as  has  been 
explained  in  a  previous  chapter,  is  two-fold — to 
relieve  the  administration  of  the  compensation  act 
from  the  burden  and  confusion  of  payments  for 
trifling  injuries,  and  to  discourage  malingering.7 
But  if  the  interval  is  a  long  one,  a  laborer  and  his 
dependents  are  apt  to  be  thrown  in  the  meantime 
into  the  extremes  of  poverty,  and  are  sometimes 
forced  to  accept  charity  to  keep  from  starvation. 

f  Amer.  Labor  Legislation  Review,  vol.  V,  no.  1,  Publication  28,  at 
p.  76  (March,  1915). 


304      WORKMEN'S  COMPENSATION  AND  INSURANCE 

So  the  ideal  law  would  provide  for  the  shortest 
waiting  period  consistent  with  the  accomplishment 
of  the  purposes  mentioned.  Two  weeks,  the  com- 
monest period  in  our  states,  is  too  long;  I  would  set 
it  at  not  more  than  three  or  four  days.7a  If  the 
laborer  is  disabled  longer  than  that,  he  should  be 
permitted  to  claim  compensation  from  the  date  of 
the  injury. 

After  much  consideration,  and  changing  my  mind 
more  than  once,  I  have  come  to  the  conclusion  that 
the  ideal  law  should  provide  for  a  state  insurance 
fund,  in  which  employers  should  be  forced  to  in- 
sure. It  is  in  the  interest  of  the  public  that  useful 
business  concerns  should  remain  solvent;  and  the 
temptation  to  which  the  individual  employer  is  sub- 
jected, where  insurance  is  not  compulsory,  to  take  a 
gambler's  chance  and  avoid  the  payment  of  the 
premiums,  is  conducive  to  unsound  financial  condi- 
tions. "But  why  not  insurance  in  private  com- 
panies?"— it  may  be  asked.  Because  centraliza- 
tion means  cheaper  and  more  efficient  management; 

7»  "The  waiting  period  in  all  cases  should  be  reduced  from  fourteen 
days  to  four  days."  McCanna,  The  New  Era,  p.  83.  Where  the 
waiting  period  is  two  weeks,  with  full  payment  from  date  of  injury 
if  the  disability  lasts  that  long,  the  temptation  of  an  employee  only 
slightly  injured  to  malinger  and  prolong  the  disability  is  tremendous. 
See,  on  this  point,  Blanchard,  Liability  and  Compensation  Insur- 
ance, p.  115. 


REQUISITES  OF  THE  IDEAL  LAW  305 

because  stability  is  essential,  and  it  is  better  assured 
by  having  the  state  back  up  the  plan  than  by  leaving 
it  to  private  concerns;  because  the  lower  the  pre- 
miums, consistent  with  safety,  the  better  for  the 
parties  and  the  public,  and  insuring  with  the  state 
eliminates  the  element  of  private  profit ;  because  the 
whole  matter  is  a  public  affair,  of  which  the  people, 
through  their  elected  representatives,  should  have 
the  ultimate  management. 

At  what  rates  should  payments  be  made  under 
the  ideal  law?  In  the  case  of  total  disability,  the 
rate  should  be  substantial  but  not  too  high.  Where 
full  wages  are  paid,  experience  has  shown  that  vol- 
untary idleness  and  malingering  are  encouraged.8 
Probably  two-thirds  or  66%%  of  the  average 
weekly  earnings  is  sufficient ;  where  wages  are  very 
low,  there  should  be  a  minimum  payment  graded 
according  to  the  number  of  dependents. 

Where  disability  is  partial,  the  problem  is  more 
difficult.  The  original  idea  was  to  estimate  pay- 
ments on  the  basis  of  the  decrease  of  earning  capac- 
ity. This  is  an  excellent  scheme  when  the  partial 
disability  is  only  temporary;  but  where  it  is  perma- 
nent that  solution  is  not  so  satisfactory.  Loss  of  an 

s  Lindley  D.  Clark  in  Journal  of  Political  Economy,  vol.  XXIII,  p. 
809  (October,  1915). 


306      WORKMEN'S  COMPENSATION  AND  INSURANCE 

eye,  for  instance,  may  not  very  seriously  impair  the 
present  earning  capacity  of  a  section-hand;  but  it 
may  make  him  incapable  of  ever  being  promoted  to 
brakeman.  In  other  words,  the  prospective  effect 
of  an  injury  should  be  taken  into  account  in  mak- 
ing awards. 

Perhaps  the  least  satisfactory  way  of  graduating 
awards  is  by  the  flat  rate  schedule.  So  many  dol- 
lars for  a  right  arm,  so  many  dollars  for  a  broken 
rib — the  sound  of  it  is  disgustingly  commercial,  and 
the  results  are  very  far  from  just.  Yet  to  make 
such  payments  in  addition  to  the  sums  estimated  on 
the  basis  of  loss  of  earning  power,  present  and  pro- 
spective, is  perhaps  to  approximate  justice  more 
closely  than  by  any  other  method.  For  disfigure- 
ment, too,  though  unaccompanied  by  physical  dis- 
ability, compensation  should  be  given,  both  because 
of  the  real  suffering  and  inconvenience  caused,  and 
because  disfigurement  almost  invariably  has  an  un- 
favorable influence  on  earning  capacity. 

Death  benefits  should  be  higher,  in  the  writer's 
opinion,  than  they  are  at  present;  and  they  should 
not  be  the  same  regardless  of  the  number  of  de- 
pendents, as  they  are  in  too  many  states.  The 
New  York  system  commends  itself  most  favorably 
to  me,  with  its  percentage  to  the  widow,  so  much 


REQUISITES  OF  THE  IDEAL  LAW  307 

more  for  each  minor  child,  etc.  But  the  total 
should  not  be  restricted,  as  in  that  state,  to  two- 
thirds  of  the  average  earnings  and  not  to  exceed  a 
certain  lump  sum.  The  ideal  law  would  give  only 
burial  expenses,  if  there  were  no  dependents ;  in  the 
case  of  minor  children,  payments  until  they  attained 
full  age ;  where  there  is  a  widow,  a  life  pension ;  and 
the  total  of  payments,  if  there  are  enough  depend- 
ents, might  equal  the  full  wages  of  the  deceased. 
In  this  way,  there  would  be  no  substantial  increase 
in  the  gross  amount  paid  as  compensation,  since  in 
the  many  cases  in  which  the  deceased  was  without 
a  family  or  with  only  one  or  two  immediate  rela- 
tives, the  disbursements  would  actually  be  dimin- 
ished; yet  where  the  dependents  were  many,  some- 
thing approaching  adequate  compensation  would  be 
assured. 

One  other  requisite  of  the  ideal  law  must  be  men- 
tioned before  we  close.  That  is  adequate  provision 
for  prompt  and  effective  administration.  In  a  few 
states,  this  matter  is  left  to  the  courts ;  but,  as  might 
have  been  expected,  this  has  proven  very  unsatis- 
factory.9 Industrial  commissions  have  undertaken 

»  See  article  entitled  "Three  years  under  the  New  Jersey  Work- 
men's Compensation  Law"  in  the  American  Labor  Legislation  Re- 
view, vol.  V,  no.  1,  Publication  28,  pages  36-102,  for  a  withering  de- 
nunciation of  the  method  of  administration  by  the  courts. 


308      WORKMEN'S  COMPENSATION  AND  INSURANCE 

the  task  in  other  jurisdictions,  deriving  their  powers 
from  various  sources ;  and  a  power  of  general  super- 
vision is  sometimes  given  to  the  state  Insurance 
Commissioner. 

An  Insurance  Board  appointed  by  the  Governor, 
subject  to  certain  restrictions,  appeals  to  me  as  the 
body  best  qualified  to  administer  the  ideal  statute. 
Such  a  board's  personnel  would  be  limited  to  practi- 
cal actuaries,  lawyers  and  others  with  special  expe- 
rience in  insurance  matters,  physicians,  and  perhaps 
one  representative  each  from  the  labor  unions  and 
the  employers.  Sittings  should  be  frequent  in  all 
towns  of  the  state ;  and  before  the  board  should  be 
brought  not  only  cases  arising  in  such  towns,  but 
also  the  evidence  collected  by  traveling  agents  in 
outlying  districts.  In  order  to  induce  the  prompt 
settlement  of  all  claims  before  such  agents  without 
the  necessity  of  appeal  to  the  board,  costs  should  be 
collected  from  all  employers  who  refuse  to  abide 
by  the  decision  of  the  local  agent  and  appeal  un- 
successfully; similarly,  employees  appealing  with- 
out success  for  increase  of  compensation  would  be 
mulcted,  though  they  should  be  permitted  to  be 
heard  before  the  board  without  penalty  in  case  no 
award  at  all  was  made  in  their  favor  at  the  original 
hearing. 


REQUISITES  OF  THE  IDEAL  LAW  309 

The  suggestions  made  in  this  chapter  have  been 
based  on  some  study  of  the  laws  now  in  force  in 
Europe  and  America ;  but  it  would  be  folly  to  pre- 
tend that  ultimate  wisdom  on  the  subject  of  work- 
men's compensation,  so  spectacular  in  its  past 
development  and  so  fruitful  of  possibilities  for  the 
future,  can  ever  be  confined  within  the  limits  of  a 
rigid  formula.  Of  one  proposition,  however,  the 
writer  is  firmly  convinced,  despite  some  indications 
to  the  contrary;  the  American  states,  sooner  or 
later,  will  be  driven  or  persuaded  to  adopt  compul- 
sory state  insurance  laws  as  the  only  satisfactory 
solution  of  the  problem  of  compensation  to  injured 
workingmen. 


BIBLIOGRAPHY 

Note :  No  attempt  has  been  made  in  the  follow- 
ing pages  to  give  anything  like  an  exhaustive  bibli- 
ography of  the  subject  of  Workmen's  Compensa- 
tion and  Employers'  Liability.  Such  an  under- 
taking would  result  in  filling  two  or  three  volumes 
at  least;  even  the  Select  List  of  References  pub- 
lished by  the  Government  Printing  Office  of  the 
United  States  in  1911,  before  the  avalanche  of  lit- 
erature on  the  subject  in  this  country  began,  is  196 
pages  in  length.  This  Bibliography,  therefore, 
refers  only  to  the  most  important  books,  magazine 
articles,  etc.,  which  have  proved  useful  in  the  prepa- 
ration of  the  present  work. 

SOURCES 

These  are  too  many  and  varied  to  be  listed  here. 
They  consist  of  statutes,  reported  cases,  reports  of 
state  commissions  on  Workmen's  Compensation 
and  Employers'  Liability,  reports  of  various  bodies 
such  as  the  American  Federation  of  Labor  which 

have  discussed  the  subject  with  which  we  are  deal- 
si  i 


312  BIBLIOGRAPHY 

ing,  government  publications  (especially  the  inval- 
uable reviews  and  special  reports  of  the  U.  S. 
Bureau  of  Labor  Statistics),  and  a  wide  range  of 
pamphlet  literature,  including  propaganda  distrib- 
uted by  the  insurance  companies  in  their  war  on 
the  state  fund  idea,  etc.,  etc. 

The  Digests  published  by  the  Workmen's  Com- 
pensation Publicity  Bureau  are  of  great  value  in 
supplementing  the  texts  of  the  statutes.  Revised 
editions  are  gotten  out  every  year  in  November  or 
December  by  the  Bureau  at  its  office,  80  Maiden 
Lane,  New  York  City. 

The  Select  List  of  References  on  Employers' 
Liability  and  Workmen's  Compensation,  compiled 
under  the  direction  of  Hermann  Henry  Bernard 
Meyer,  Chief  Bibliographer,  and  published  by  the 
U.  S.  Government  Printing  Office  at  Washington, 
remains  the  most  exhaustive  collection  of  references 
on  the  earlier  phases  of  the  movement.  Published 
1911. 

BOOKS 

WILLOUOHBY,  WILLIAM  FBANKLIX — Workingmen's  Insurance — New 
York:  T.  Y.  Crowell  &  Co.  (1898)— 386  pp. 

RUEGO,  A.  H. — Law  of  Employer  and  Workman  in  England — Lon- 
don: William  Clowes  &  Sons,  Ltd.  (1905)— 199  pp. 

LEWIS,  FRANK  W. — State  Insurance — Boston:  Houghton,  Mifflin  & 
Co.  (1909)— 225  pp. 

HENDKHSOX,  CHARLES  RICHMOND — Industrial  Insurance  in  the  United 
States — Chicago:  University  of  Chicago  Press  (1909) — 429  pp. 


BIBLIOGRAPHY  313 

DOWNEY,  E.  H. — History  of  Labor  Legislation  in  Iowa — Iowa  City: 
The  State  Historical  Society  of  Iowa  (1910)— 271  pp. 

EASTMAN,  CRYSTAL — Work- Accidents  and  the  Law — New  York: 
Charities  Publication  Committee  (1910)— 331  pp. 

FRANKEL,  LEE  K.  and  DAWSON,  MILES  M. — Workingmen's  Insurance 
in  Europe — New  York:  Charities  Publication  Committee  (1910) 
— *33  pp. 

RANDOLPH,  CARMAN  F. — Brief  on  the  Legal  Aspects  of  Systematic 
Compensation  for  Industrial  Accidents — (1910) — 143  pp. 

SEAGER,  HENRY  ROGERS — Social  Insurance — New  York:  The  Macmil- 
lan  Co.  (1910)— 175  pp. 

CAMPBELL,  GILBERT  LEWIS — Industrial  Accidents  and  Their  Compen- 
sation—Boston: Houghton,  Mifflin  &  Co.  (1911)— 98  pp. 

DAWBARN,  C.  Y.  C. — Employers'  Liability  and  Workmen's  Compen- 
sation— London:  Sweet  and  Maxwell,  Ltd.  (Fourth  Edition, 
1911). 

DAWSON,  WILLIAM  HARBTJTT — Social  Insurance  in  Germany,  1883- 
1911— London:  T.  Fisher  Unwin  (1911)— 279  pp. 

RUBINOW,  I.  M. — Studies  in  Workmen's  Insurance:  Italy,  Russia, 
Spain— New  York:  (1911)— 2376  pp. 

DOWNEY,  E.  H. — History  of  Work  Accident  Indemnity  in  Iowa — 
Iowa  City:  the  State  Historical  Society  of  Iowa  (1912)— 321  pp. 

MONEY,  L.  G.  CHIOZZA — Insurance  Versus  Poverty — London:  Me- 
thuen  &  Co.  (1912)— 381  pp.  (Introduction  by  David  Lloyd- 
George.) 

BURDICK,  FRANCIS  M. — The  Law  of  Torts — New  York:  Banks  Law 
Publishing  Co.  (Third  Edition,  1913)— 578  pp. 

HAYES,  CARLTON— British  Social  Politics— Boston :  Ginn  &  Co.  (1913) 
—574  pp. 

GEPHART,  W.  F. — Insurance  and  the  State — New  York:  The  Mac- 
millan  Co.  (1913)— 228  pp. 

RUBINOW,  I.  M. — Social  Insurance — New  York:  Henry  Holt  &  Co. 
(1913)— 501  pp. 

BOYD,  JAMES  HARRINGTON — A  Treatise  on  the  Law  of  Compensation 
for  Injuries  to  Workmen  under  Modern  Industrial  Statutes — 
Indianapolis:  The  Bobbs-Merrill  Co.  (1913)— 2  vols.,  1500  pp. 

BRADBURY,  HARRY  B. — Workmen's  Compensation  and  State  Insurance 
Law — New  York:  The  Banks  Law  Publishing  Co.  (Second  Edi- 
tion, 1914)— 2  vols.,  2328  pp.  [3d  Ed.  now  out.] 

HOLMWOOD,  WILLIAM  E. — New  Jersey  Employers'  Liability  Act — 
Newark,  N.  J.:  Soney  and  Sage  (1914). 


3H  BIBLIOGRAPHY 

MAROT,  HELEN — American  Labor  Unions — New  York:  Henry  Holt  & 
Co.  (1914)— 275  pp. 

CHARTRES,  JOHN — Judicial  Interpretations  of  Workmen's  Compensa- 
tion Law— London:  Butterworth  &  Co.  (1915) — 740  pp. 

COLE,  G.  D.  H.— The  World  of  Labour— London:  G.  Bell  &  Sons,  Ltd. 
(1915)— 443  pp. 

DALE,  EDGAR  T. — Canadian  Workmen's  Compensation  Acts  and  Cases 
—Winnipeg:  Butterworth  &  Co.  (1915)— 162  pp. 

PILLSBUHY,  WARREN  H. — Workmen's  Compensation  Acts — Chicago: 
Blackstone  Institute  (1915) — 47  pp. 

ROBERTS,  MAURICE  G. — Injuries  to  Interstate  Employees  of  Railroads 
— Chicago:  Callaghan  &  Co.  (1915) — 451  pp. 

THORNTON,  WILLIAM  WHEELER — A  treatise  on  the  Federal  Employers' 
Liability  and  Safety  Appliance  Acts — Cincinnati:  The  W.  H. 
Anderson  Co.  (Third  Edition,  1915). 

COMMONS,  JOHN  R.  and  ANDREWS,  JOHN  B. — Principles  of  Labor 
Legislation — New  York:  Harper  &  Bros.  (1916) — 488  pp. 

CONNOR,  JEREMIAH  F. — Employers'  Liability,  Workmen's  Compensa- 
tion, and  Liability  Insurance — New  York:  The  Spectator  Co. 
(1916)— 222  pp. 

GLASS,  WALTER  M. — The  Law  of  Workmen's  Compensation — Roches- 
ter, N.  Y.:  The  Lawyers'  Cooperative  Publishing  Co.  (1916)— 
537  pp. 

GREENWOOD,  JOHN  HENRY — A  Handbook  of  Industrial  Law — London: 
University  of  London  Press  (1916)— 282  pp. 

RICKEY'S  FEDERAL  EMPLOYERS'  LIABILITY,  SAFETY  APPLIANCE,  AND 
HOURS  OF  SERVICE  ACTS — Charlottesville,  Va.:  The  Michie  Co. 
(Second  Edition,  1916)— 734  pp. 

TILL  YARD,  FRANK — Industrial  Law — London:  A.  &  C.  Black,  Ltd. 
(1916)— 609  pp. 

WILSON,  ALBERT  E. — Workmen's  Compensation  and  Employers'  Lia- 
bility Acts — Chicago:  LaSalle  Extension  University  (1916)— 86 
pp. 

HONNOLD,  ARTHUR  B. — A  treatise  on  the  American  and  English 
Workmen's  Compensation  Laws — Kansas  City,  Mo.:  Vernon  Law 
Book  Co.  (1917)— 2  vols.,  1905  pp. 

MCCANNA,  FRANCIS  I. — The  New  Era — Providence,  R.  I.:  Sun  Print- 
ing Co.  (1917)— 136  pp. 

MODERN  INSURANCE  PROBLEMS — The  Annals  (American  Academy  of 
Political  and  Social  Science,  Philadelphia),  voL  LXX  (March, 
1917)— 347  pp. 


BIBLIOGRAPHY  315 

KISEB,  DONALD  J. — Workmen's  Compensation  Acts:  A  Corpus  Juris 

Treatise — New  York:  American  Law  Book  Co.  (1917) — 146  pp. 
WOODBUHY,  ROBERT  MOBSE — Social  Insurance:  An  Economic  Analysis 

—New  York:  Henry  Holt  &  Co.  (1917)— 171  pp. 
RHODES,  J.  E.  2o. — Workmen's  Compensation — New  York:  The  Mac- 

millan  Co.  (1917)— 300  pp. 
BLANCHARD,    RALPH    H. — Liability    and   Compensation   Insurance — 

New  York:  D.  Appleton  &  Co.  (1917)— 380  pp. 

MAGAZINE  ARTICLES 

MECHEM,  FLOYD  R. — Employers'  Liability — 44  American  Law  Review, 
pages  221-255  (March-April,  1910). 

KHONE,  CHARLES  F. — Employers'  Liability  Policies — 44  American  Law 
Review,  pages  513-537  (July-August,  1910). 

WALTON,  F.  P. — Workmen's  Compensation  and  the  Theory  of  Pro- 
fessional Risk — 11  Columbia  Law  Review,  pages  36-50  (January, 
1911). 

BOHLEN,  FRANCIS  H. — A  Problem  in  the  Drafting  of  Workmen's 
Compensation  Acts.  I.  Personal  Injury  Arising  Out  of  and  in 
the  Course  of  the  Employment — 25  Harvard  Law  Review,  pages 
328-348,  401-427,  517-547  (February,  March  and  April,  1912). 

WAMBAUGH,  EUGENE — Workmen's  Compensation  Acts:  Their  Theory 
and  Their  Constitutionality — 25  Harvard  Law  Review,  pages  129- 
139  (December,  1911). 

SMITH,  JEUEMIAH — Sequel  to  Workmen's  Compensation  Acts — 27 
Harvard  Law  Review,  pages  235-259  (January,  1914)  and  pages 
344-368  (February,  1914). 

BOHLEN,  FRANCIS  H. — Some  Recent  Decisions  Under  the  Workmen's 
Compensation  Acts  of  Massachusetts  and  Michigan — 14  Colum- 
bia Law  Review,  pages  563-570,  648-658  (November  and  Decem- 
ber, 1914). 

CHOSS,  IRA  B. — Workmen's  Compensation  in  California — American 
Economic  Review,  voL  V,  no.  2,  page  454  (June,  1915). 

BUFORD,  EDWARD  P. — Assumption  of  Risk  under  the  Federal  Employ- 
ers' Liability  Act — 28  Harvard  Law  Review,  pages  163-185  (De- 
cember, 1914). 

DOWNEY,  E.  H.— Essentials  of  Workmen's  Compensation  Statistics- 
Journal  of  Political  Economy,  vol.  22,  no.  10,  pages  955-968 
(December,  1914). 

FIBBER,    W.    C. — Workmen's    Compensation    in    Ontario — American 


316  BIBLIOGRAPHY 

Economic  Review,  vol.  V,  pages  177  and  following  (March, 
1915). 

RUBINOW,  I.  M. — A  Standard  Accident  Table  as  a  Basis  for  Com- 
pensation Kates — Quarterly  Publications  of  the  American  Statis- 
tical Association,  new  series  109  (vol.  XIV),  pages  358-^415 
(March,  1915). 

AMERICAN  LABOR  LEGISLATION  REVIEW,  vol.  V,  no.  1,  Publication  28 
(March,  1915) — Workmen's  Compensation  number:  includes  ad- 
dresses by  Martin  G.  Brumbaugh  (pages  9-11),  John  Mitchell 
(pages  15-19),  Daniel  J.  McGillicuddy  (pages  11-14),  etc.;  arti- 
cle on  "Three  Years  under  the  New  Jersey  Workmen's  Compen- 
sation Law"  (pages  36-102) ;  and  a  general  forum  on  "Compen- 
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FISHER,  W.  C.— Field  of  Workmen's  Compensation  in  the  United 
States — American  Economic  Review,  vol.  5,  no.  2  (June,  1915), 
pages  221-278. 

ANDREWS,  JOHN  B. — The  New  Jersey  Compensation  Law — New  Jer- 
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STOCKTON,  F.  T. — Indiana  Workmen's  Compensation  Act — American 
Economic  Review,  vol.  5,  no.  2,  pages  428-429  (June,  1915). 

PEASE,  J.  G. — An  English  Workman's  Remedies  for  Injuries  Received 
In  the  Course  of  His  Employment,  at  Common  Law  arid  by 
Statute — 15  Columbia  Law  Review,  no.  6,  pages  508-523  (June 
1915). 

BRtriiRE,  R.  W. — Compensation  and  Business  Ethics — Harper's  Maga- 
zine, vol.  131,  pp.  210-219  (July,  1915). 

FISHER,  W.  C. — Workmen's  Compensation  Acts  of  1915 — American 
Economic  Review,  vol.  5,  no.  3,  pages  671  and  following  (Sep- 
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DAWSON,  MILES  MENANDER — Constitutionality  of  Workmen's  Compen- 
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22,  no.  4,  pages  275-280  (September,  1915). 

WILLIAMS,  LEWIS  C. — Compulsory  Workmen's  Compensation  Laws — 
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1915). 

CHANET,  LTTCIEN  W.— The  Compensation  Factor  in  Accident  Reduc- 
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WILLIAMS,  WAYNE  C. — The  Argument  for  Workmen's  Compensation 
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BIBLIOGRAPHY  317 

TAN  NEE,  W.  V.— Workmen's  Compensation  in  the  State  of  Washing- 
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THORNTON,  HON.  WILLIAM  W.— The  Federal  Employers'  Liability 
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ber, 1915). 

SUTHERLAND,  HON.  GEORGE — Compulsory  Workmen's  Compensation 
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YAPLE,  WALLACE  D.— Extra-Terr itorial  Operation  of  State  Work- 
men's Compensation  Acts — The  Weekly  Underwriter,  vol.  xciii, 
no.  14,  pages  428-480  (October  2,  1915). 

FISHER,  WILLARD  C.— The  Scope  of  Workmen's  Compensation  in  the 
United  States — The  Quarterly  Journal  of  Economics,  vol.  XXX, 
no.  1  (November,  1915),  pages  22-63. 

CLARK,  LINDLEY  D. — Workmen's  Compensation  and  the  Federal  Con- 
gress— Journal  of  Political  Economy,  vol.  XXIII,  no.  8,  pages 
807-821  (October,  1915). 

THE  WORKMEN'S  COMPENSATION  LAW — Original  Article  in  Bench  and 
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LOWELL,  JAMES  A. — Assumption  of  Risk  and  the  Workmen's  Com- 
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49-52  (February,  1916). 

FEDERAL  WORKMEN'S  COMPENSATION — The  Labor  Gazette,  vol.  1,  no. 
5,  page  53  (February,  1916). 

BALDWIN,  F.  SPENCER — Advantages  and  Disadvantages  of  State 
Funds  in  Workmen's  Compensation — American  Labor  Legislation 
Review,  voL  VI,  pages  3-10  (March,  1916). 

GOMPERS,  SAMUEL — Voluntary  Social  Insurance  vs.  Compulsory — 
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357,  453-466,  669-681  (May,  June  and  August,  1916). 

RHODES,  J.  E.,  2n — Some  Aspects  of  Compensation  Administration — 
Maine  Law  Review,  vol.  9,  pp.  197-215  (May,  1916). 

DOWNEY,  E.  H. — Organization  of  Workmen's  Compensation  Insur- 
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SHERLOCK,  C.  C. — Occupational  Diseases — Machinery  (English  ed.) 
vol.  23,  page  426  (January,  1917). 

HAMILTON,  GRANT — Trade  Unions  and  Social  Insurance — American 
Federationist,  vol.  XXIV,  no.  2,  pages  122-125  (February,  1917). 


318  BIBLIOGRAPHY 

DWIOHT,  EDMUND — The  Risk  and  Development  of  Employment  Lia- 
bility Insurance — Economic  World,  vol.  99,  pp.  311-314  (March 
3,  1917). 

SHERMAN,  P.  TECUMSEH — Compensation  for  Industrial  Diseases — 
University  of  Pennsylvania  Law  Review,  vol.  65,  pp.  513-526 
(April,  1917). 

REVIEW  OF  LABOR  LEGISLATION  OF  1917,  especially  portion  on  Social 
Insurance — American  Labor  Legislation  Review,  vol.  VII,  no.  3, 
Publication  38,  pp.  573-594  (September,  1917). 

ADRIANCE,  WALTER  M. — Workmen's  Compensation  in  New  Jersey — 
American  Economic  Review,  vol.  VII,  pp.  712-713  (September, 
1917). 

POWELL,  THOMAS  REED — The  Workmen's  Compensation  Cases — Politi- 
cal Science  Quarterly,  vol.  XXXII,  pp.  542-569  (December, 
1917). 

BLACK,  HENRY  CAMPBELL — Progressive  Legislation,  the  Constitution, 
and  the  Supreme  Court — The  Constitutional  Review,  vol.  II,  pp. 
19-29  (January,  1918). 

THE  ARMY  AND  NAVY  INSURANCE  ACT  (editorial) — Case  and  Com- 
ment, vol.  XXIV,  pp.  655-656  (January,  1918). 

WYLIE,  GEORGE  W. — Admiralty  versus  Compensation — American  Law 
Review,  vol.  LII,  pp.  63-71  (January-February,  1918). 

WORKMEN'S  COMPENSATION  ACTS  IN  THE  UNITED  STATES  (part  of  con- 
tinued article) — The  Lawyer  and  Banker,  vol.  XI,  pp.  65-74 
(January-February,  1918). 

ANGELL,  ERNEST — Recovery  Under  Workmen's  Compensation  Arts 
for  Injury  Abroad — 31  Harvard  Law  Review,  pp.  619-636  (Feb- 
ruary, 1918). 

GEPHART,  W.  F. — The  War  Risk  Insurance  Act  of  the  United  States 
— American  Economic  Review,  vol.  VIII,  pp.  195-202  (March, 
1918). 

DOUGLAS,  PAUL  H. — The  War  Risk  Insurance  Act — The  Journal  of 
Political  Economy,  vol.  XXVI,  pp.  461-483  (May,  1918). 


INDEX 


"Accident"  construed  by  English 

courts,  38,  39 
Accident  prevention 
control  of  insurance   rates  as 

bringing  about,  132,  133 
German  safety  regulations,  27, 

28 
methods  of  accomplishing,  131, 

132 

problem  of,  129-133 
statistics,  14,  131 
statutory  provisions,  130,  131 
Administration,  methods  of 
court  system  criticized,  121-124, 

214-224 
court   system  in   New   Jersey, 

211-225 

ideal  system,  125,  126 
labor  opinions  on,  260-263 
new  administrative  machinery  in 
New  Jersey,  224-225,  232-238 
typical     statutory     provisions, 

124,  125 

under  ideal  law,  307,  308 
Alaska,    forfeiture    for    miscon- 
duct under  act,  102 
Alberta,    compensation    law    en- 
acted, 49 

Appeals,  German  law,  27 
Arizona 

injuries  covered  by  act,  99 
labor  opinion  on  methods  of  ad- 
ministration, 262 
labor  opinion  on  waiting  period, 
956 

319 


Arkansas,  labor  opinion  on  ex- 
clusion of  casual  employees, 
257 
Assumption  of  risk,  doctrine  of 

(see  Common  Law) 
Atlantic  City,  Workmen's  Com- 
pensation conference,  53 
Australian  provinces,  compensa- 
tion laws  enacted,  48,  49 
Austria,     compulsory     insurance 

law,  47 
Awards 
absence  of  experience  on  which 

to  base,  108 
limitations  on,  in  general,  108- 

110 

lump  sum  payments,  114 
nature   of,   in    American    acts, 

108-114 
requisites  of  proper  schedules, 

110-113 
schedules    of    disabilities,    109, 

110 

under  ideal  law,  304-307 
under  New  Jersey  act,  195-207 
under  Soldiers'  and  Sailors'  In- 
surance Act,  275-278 


B 


Belgium,  compensation  law,  48 

British  Columbia,  compensation 
law  enacted,  49 

Bulgaria,  compensation  law  en- 
acted, 49 

Burial  expenses,  German  law,  27 


320 


INDEX 


California 
accident  prevention  provisions, 

130 

awards  under  act,  109 
coverage   of  occupational   dis- 
ease, 97 

distribution  of  compensation  in- 
surance among  carriers,  162, 
163 
forfeiture  for  misconduct  under 

act,  103 
labor  opinion  on  employments 

covered,  257 
labor   opinion   on   methods   of 

administration,  261 
labor   opinion   on  waiting  pe- 
riod, 255 
"Labor    Record"    of    Senators 

and  Assemblymen,  240 
medical  and  surgical  aid  pro- 
visions, 119 

success  of  state  fund,  149-152 
Cape  of  Good  Hope,  compensa- 
tion law  enacted,  48 
Casual  employments 
not  covered  by  most  acts,  90 
not  covered  in  New  Jersey,  186, 

187 

not  covered  by  recent  acts,  94 
would  be  covered  by  ideal  law, 

299,  300 

Charitable  workers 
not  covered  by  some  compen- 
sation laws,  92 
not  covered  in  Idaho,  94 
Clerical  workers,  not  covered  by 

Iowa  act,  92 
Colorado, 

forfeiture   for  misconduct  un- 
der act,  101 


injuries  covered  by  act,  99 
Common  employment,  doctrine  of 
(see   Fellow   Servant   Rule; 
Common  law) 
Common  law 
assumption  of  risk,  doctrine  of, 

7,8 

contributory  negligence  rule,  5 
early    dissatisfaction    with,    in 

United  States,  49 
employers'  duties,  8,  9 
fellow-servant  rule,  5-7 
negligence,  liability  for,  4 
workmen's     compensation    dis- 
tinguished, 10-12 
Compensation  (see  other  titles;  as 
to   soldiers    and    sailors,   see 
Insurance,  Soldiers'  and  Sail- 
ors') 
Compulsory    principle 

adopted    completely    in    some 

states,  107 

effect  of  deprivation  of  com- 
mon law  defenses,  105,  106 
few  states  frankly  adopt,  105 
presumption  of  acceptance,  106, 

107 
should  be  found  in  ideal  law, 

297,  298 

Constitutionality 
a  compensation  problem,  57 
amendments  to  avoid  question, 

69 

compulsory  law  upheld,  77 
doctrine  of,  56 

Illinois  law  partially  invalid,  67 
Iowa  law  upheld,  81 
Ives  case,  59,  77,  81,  82,  180 
Kentucky  law  invalid,  68 
Kentucky  law  upheld,  68 
liability  without  fault,  58 


INDEX 


321 


Maryland  law  of  1902  invalid, 

59 

Montana  law  invalid,  63,  64 
New  Jersey  law  upheld,  66 
New  Jersey  scheme,  65,  66 
New  York  law  invalid,  59 
New  York  law  upheld,  77-80 
no  longer  a  vital  issue,  82,  83 
of  abolition  of  common  law  de- 
fenses, 74,  75 
Ohio  law  upheld,  76 
Texas  law  construed,  69-74 
Texas  law  upheld,  72-74 
voluntary  law  upheld,  76 
Washington  law  upheld,  61,  62 
Contributory  negligence  rule  (see 

Common  law) 
Courier  v.  Simpson  Construction 

Co.,  67 

Courts,    administration    by    (see 
Administration,  methods  of) 
Cunningham  v.  Northwestern  Im- 
provement Co.,  63,  64 


D 


Definitions 

Employers'  Liability,  12 

State  Insurance,  13 

Workmen's  Compensation,  3 
Delaware 

accident  prevention  provisions, 
130 

employments    not    covered    by 
act,  94 

forfeiture   for  misconduct  un- 
der act,  102,  103 

limited  coverage  of  disease  by 
act,  96 

medical  and  surgical  aid  pro- 
visions, 118 


Denmark,  compensation  law,  47, 

48 

Disease  (see  also  Disease,  Occu- 
pational) 

"injury"    sometimes   construed 
to  include,  95,  96 

resulting  from  accident,  96,  97 

to  what  extent  covered  by  vari- 
ous statutes,  96,  97 
Disease,  Occupational 

coverage  by  California  law,  97 

English  law,  39,  40 

in  New  Jersey,  189-195 

judicial   construction   in   favor 
of  coverage,  98,  99 

labor  opinion  with  regard  to, 
259-260 

not  covered  by  most  compensa- 
tion laws,  97 

reasons  for  coverage  by  com- 
pensation laws,  97-99 

would  be  covered  by  ideal  law, 

301 
Diseases,  Industrial  (see  Disease, 

Occupational) 
Domestic  Service 

coverage  in  New  Jersey,  85 

not  covered  in  many  states,  89, 
94 

E 

Economic  basis  of  Workmen's 
Compensation  (see  Work- 
men's Compensation) 

Election  of  remedies,  by  English 
workman,  45,  46 

Elective  officials 
not  compensated  in  New  Jer- 
sey, 187,  188 

not  covered  in  Idaho  or  Utah, 
94 


822 


INDEX 


Employees,  Federal  (see  United 

States) 
Employments,  casual  (see  Casual 

Employments) 

Employments    covered    by    com- 
pensation laws 

in  England,  36,  37 

in  Germany,  26 

in  United  States,  85-94 

under  ideal  law,  298-301 

under  New  Jersey  act,  185-189 
Employments,  public 

at  more  than  $1200  a  year  in 
New  Jersey,  187-188 

coverage     (general)     in    New 
Jersey,  85 

coverage  in  general,  92,  93,  94 

coverage    under    Federal    act, 
85 

should  be  included  under  ideal 

law,  300 
Employers'  liability 

at  common  law,  4-9 

denned,  12 

German  act  of  1871,  23 

statistics,  17 
Employers'  Liability  Commission 

(see  New  Jersey) 
England 

absence  of  insurance  features  in 
act  criticized,  137-139 

"accident"  construed  by  courts, 
38,39 

compensation,    when    payable, 
37,38 

election  of  remedies  by  work- 
men, 45,  46 

Employers'  Liability  Act,  1880, 
33-35 

employments  subject  to  com- 
pensation, 36,  37 


fellow-servant    rule    extended,, 
32,  33 

industrial  diseases,  when  com- 
pensated, 39,  40 

National  Insurance  Act,  1911, 
46 

"out  of  and  in  the  course  of  em- 
ployment"   construed,  40-43 

"serious  and  wilful  misconduct" 
construed,  44 

sub-contractors,  44,  45 

vocational  training  for  disabled 
soldiers  and  sailors,  284 

workingmen's  insurance  by  pri- 
vate agencies,  46,  47 

Workmen's'  Compensation  Act, 
1897,  35 

Workmen's   Compensation   Act 

of  1906  passed,  35,  36 
Extraterritorial  effect 

judicial     holdings     regarding, 
128 

legislative  provisions,   128 

problem  of,  126-129 


Family,  members  of  employer's 
not  covered  by  some  acts,  92, 
94 

Farm  labor 

covered  in  New  Jersey,  85 
not  covered  in  most  states,  89, 
90 

Federal  employees  (see  United 
States) 

Fellow-servant  rule  (see  Common 
Law;  also  England) 

Finland,  compensation  law  en- 
acted, 48 


INDEX 


Florida,  labor  opinion  on  methods 
of  administration,  261 

Forfeiture  for  misconduct  (see 
Misconduct,  Forfeiture  for) 

France,  compensation  law  en- 
acted, 47 


•Georgia,  labor  opinion  on  meth- 
ods   of    administration,    261, 
262 
<}ermany 

accident  insurance  enactments, 
25 

appeals  from  trade  association 
findings,  27 

Agricultural  insurance  law,  28 

Building  Trades  accident  insur- 
ance law,  28 

burial  expenses  of  workman  ac- 
cidentally killed,  27 

compulsory  insurance  adopted, 
22,  24 

confusion   in    statistical   meth- 
ods, 108 

contributions       to       insurance 
funds,  26 

early  laws  of  the  states,  22,  23 

Employers'    Liability    Law    of 
1871,  23 

employments  subject  to  indus- 
trial insurance,  26 

first  modern  compensation  law, 
20 

invalidity  insurance,  29,  30 

Marine  accident  insurance  law, 
28 

medical  care  of  injured  work- 
men, 26 

old  age  insurance,  29,  30 


pensions  to  injured  workmen, 

36,  27 

philosophic  influences,  21 
Prussian  Act  of  1838,  22 
safety  regulations,  27,  28 
Sick  Insurance  Act,  1883,  24, 

25 

survivors'  insurance,  30 
voluntary     insurance     law    of 

1876,  23,  24 
waiting  period,  27 
Workmen's     Insurance     Code, 

1911,  30 

Greece,    compensation    law    en- 
acted, 48 
Greene  v.  Caldwell,  68 

H 

Hawaii 

forfeiture   for   misconduct  un- 
der act,  102 
limited  coverage  of  disease  by 

act,  96 

Hazardous  employments 
coverage  in  Kansas,  87,  88 
coverage      in      laws      recently 

passed,  94 

coverage  in  New  York,  86 
favored  in  compensation  legis- 
lation, 85 
Holland,    compulsory    insurance 

law,  48 

Hungary,  compensation  law  en- 
acted, 48 


Idaho 

compulsory  principle  adopted, 
107 


324 


INDEX 


employments    not    covered    by 
act,  94 

farm  and   domestic   labor   not 
covered  by  act,  89 

forfeiture  for  misconduct  un- 
der act,  102 

insurance  experience,  154,  155 

labor    opinion    on    methods    of 
administration,  262 

labor   opinion   on   waiting  pe- 
riod, 255 

medical  and  surgical  aid  pro- 
visions, 119 

method    of    administering    act, 

124,  125 

Ideal     law,    requisites     of     (see 
also    other    titles),     general 
discussion,  296-309 
Illinois,    compensation    law    par- 
tially invalid,  67 

Indiana,  limited  coverage  of  dis- 
ease by  act,  96 
Industrial  diseases    (see  Disease, 

Occupational) 
"Injury" 

when  includes  disease,  96 

word    liberally    construed    by 

courts,  95 

Insurance    (see    also    Insurance, 
Soldiers'  and  Sailors') 

absence  of  provisions  in  Eng- 
lish law  criticized,  137-139 

by  private  agencies  in  England, 
46,  47 

competitive,    tendency    to    un- 
dermine security,  161 

compulsory,  adopted  in  foreign 
countries,  22,  24,  47,  48 

compulsory,   adopted    in   some 
American  states,  136 

experience  rating,  174-176 


invalidity,  German  law,  29,  SO 

merit  rating,  170-17C 

mutual,  accident  prevention 
tendency,  172-173 

mutual,  cost  of,  164 

mutual,  discussion  of,  162-164 

mutual,  experience  in  Massa- 
chusetts, 152-154 

mutual,  experience  in  Wiscon- 
sin, 154 

necessity  of,  134-140 

old  age,  German  law,  29,  30 

private,  excessive  premiums  in 
Iowa,  154,  155 

private,  good  work  done  by, 
160,  161 

private,  high  cost  of,  164,  165 

private,  questionable  practices, 
145 

propaganda  of  private  carriers, 
140,  141 

reciprocal  or  inter-insurance, 
176 

rival  methods  mentioned,  140 

schedule  rating,  174 

self-insurance,  176 

social,  labor  opposed  to,  242— 
247 

state,  accident  prevention  ten- 
dency, 170-176 

state,  adoption  urged,  141,  142 

state,  arguments  against,  142- 
149 

state,  defects  of  Nevada  act, 
158,  159 

state,  defined,  13 

state,  disadvantage  of  different 
laws,  177 

state,  economy  of,  164-165 

state,  equitable  distribution  of 
accident  cost,  167-169 


INDEX 


825 


state,  experience  in  Montana, 
155 

state,  experience  in  New  York, 
157,  158 

state,  experience  in  Ohio,  156, 
157 

state,  experience  in  West  Vir- 
ginia, 156 

state,  in  several  American  jur- 
isdictions, 141 

state,  general  success  of,   159, 
160 

state,  security  of,  166,  167 

state,    success    in    California, 
149-152 

state,     success     in     Maryland, 
152 

under  ideal  law,  304,  305 

under  New  Jersey  law,  207-211 

voluntary,   under    German   act 
of  1876,  23,  24 

Workmen's  Compensation  Pub- 
licity Bureau,  140 

Workmen's  Compensation  Ser- 
vice Bureau,  140,  161 
Insurance,  Soldiers'  and  Sailors' 

Act  passed,  265 

allotments  and  allowances,  268- 
274 

attorneys     and     claim     agents 
regulated,    292-293 

compensation    provisions,    268, 
275-282 

conditions     of     forfeiture,     in 
general,  280 

coverage  provided  for,  288-289 

criticism  of  continuing  policies 
after  war,  291 

defects  of  the  pension  system, 
266-267 

Division  to  administer  act,  268 


English  precedent  in  vocational 
training,  284 

features  of  act,  in  general, 
268 

forfeiture  for  misconduct,  275 

for  what  injuries  compensation 
paid,  in  general,  275 

insurance  provisions  of  act, 
286-295 

medical  and  surgical  aid,  279 

miscellaneous  provisions,  281- 
282 

need  for  vocational  training, 
285 

others  than  insured  may  apply 
for  policies,  294-295 

philanthropic  and  practical  as- 
pects, 286-287 

prohibitive  rates  one  reason  for 
act,  269 

provisions  of  policy,  in  gen- 
eral, 289-290 

schedule  of  payments,  270-273 

schedule  of  payments,  275-278 

scheme  the  outcome  of  coopera- 
tion, 268-269 

some  common  criticisms  of 
scheme,  293-294 

social  problem  of  war  risks, 
265-266 

things  essential  to  success  of 
scheme,  267,  268 

time  limitations  on  awards,  281 

vocational  training,  268,  282- 
285 

voluntary  and  compulsory  al- 
lotments, 269-270 

will  help  to  prevent  pensions 
scandals,  287-288 

where  no  allotments  made,  273- 
274 


INDEX 


Iowa 

clerical  and  other  employees 
excluded  from  compensation, 
89,  92 

compensation  law  upheld,  81 

insurance  experience,  154,  155 

labor  opinion  on  methods  of 
administration,  262 

labor  opinion  on  waiting  pe- 
riod, 255 

limited  coverage  of  disease  by 
act,  96 

medical  and  surgical  aid  pro- 
visions, 119 

method    of    administering   act, 

124,  125 
Italy,  compulsory  insurance  law, 

48 
Ives   v.   South   Buffalo   Ry.   Co. 

(see  Constitutionality) 
Ives  case  (see  Constitutionality) 


Japan,  compensation  law  enacted, 

49 
Jeffrey     Manufacturing     Co.     v. 

Blagg,  76 
Jensen  v.   Southern   Pacific  Co., 

77-79 

K 

Kansas 

awards  under  act,  109,  113 

disease  not  mentioned  in  act, 
96 

employments  covered  by  com- 
pensation law,  87,  88 

labor  opinion  on  schedule  of 
awards,  252 

labor  opinion  on  waiting  pe- 
riod, 255 


medical  and  surgical  aid  pro- 
visions, 119 
Kentucky 

first  compensation  law  invalid, 
68 

labor    opinion    on    methods    of 
administration,  261 

labor   opinion   on   schedule   of 
awards,  251 

labor   opinion   on   waiting  pe- 
riod, 256 

second    compensation   law   up- 
held, 68 

Kentucky  State  Journal  Co.  v. 
Workmen's  Compensation 
Board,  68 


Labor 

American    Federation   of,   240, 
245,   249,   250,   258,   259,  263 

favors  compensation  laws,  241, 
242 

favors    compulsory   laws,   247- 
249 

influence  of  organized,  239-241 

opinions  on  basis  for  compen- 
sation rates,  249-253 

opinions  on  employments  cov- 
ered, 256-259 

opinions    on    methods    of    ad- 
ministration, 260-263 

opinions   on   occupational   dis- 
ease, 259-260 

opinions     on    waiting    period, 
253-256 

opposed    to    social    insurance, 
242-247 

sentiment  shifting,  263-264 
Liability,    employers'    (see    Em- 
ployers' Liability) 


INDEX 


327 


Liability  without  fault  (see  Con- 
stitutionality) 

Liechtenstein,  compensation  law 
enacted,  48 

Louisiana,  forfeiture  for  miscon- 
duct under  act,  102 

Luxembourg,  compensation  law 
enacted,  48 

M 

Maine,  forfeiture  for  intoxication 

under  act,  104 

Malingering,     payment     of     full 
wages    as    compensation    en- 
courages, 52,  205 
Manitoba,  compensation  law  en- 
acted, 49 
Maryland 

act  of  1902  declared  unconsti- 
tutional, 50,  59 

compulsory    principle    adopted 
in  act,  107 

forfeiture   for  misconduct  un- 
der act,  102 

insurance    provisions    of    act, 
136 

labor  opinion  on  employments 
covered,  257 

labor  opinion  on   schedule  of 
awards,  251 

labor   opinion   on   waiting  pe- 
riod, 256 

state  insurance  fund,  141,  152 
Massachusetts 

abolition    of   common   law   de- 
fenses, 105,  106 

accident  prevention  provisions, 
130,  131 

committee  on  relations  of  em- 
ployer and  employed,  50 


disease  not  mentioned  in   act, 
96 

employments  covered  by  com- 
pensation law,  88 

forfeiture   for  misconduct  un- 
der act,  102 

insurance  experience,  152-154 

labor's    opinion    on    compensa- 
tion rates,  250 

labor's  opinion  on  waiting  pe- 
riod, 256 

methods   of   administration   of 
act,  124 

mutual  insurance  in,  163 
Medical  and  surgical  aid 

German  law  regarding,  26 

in  New  Jersey,  198,  199 

necessity  of,  117-120 

provisions    in    American    acts, 
118,  119 

selection  of  physician,  120,  121 

under  Soldiers'  and  Sailors'  In- 
surance Act,  279 
Memphis  Cotton  Oil  Co.  v.  Tol- 

bert,  69 

Mexico,    compensation    law    en- 
acted, 49 
Michigan 

disease  not  mentioned  in  act, 
96 

employments  covered  by  com- 
pensation law,  89 

state  insurance  fund,  141 
Middleton    v.    Texas    Light    and 

Power  Co.,  70-74 
Minnesota 

commission  of  inquiry,  53 

disease  not  mentioned  in  act, 
96 

farm  and  domestic  labor  not 
covered  by  act,  89 


398 


INDEX 


forfeiture  for  misconduct  un- 
der act,  102 

labor  opinion  on  waiting  pe- 
riod, 256 

method    of    administration    of 

act,  122 
Misconduct,  forfeiture  for 

breach  of  statutory  regula- 
tions, 100,  103 

culpable  negligence,  100 

failure  to  use  safety  appli- 
ances, 100,  103 

injury  caused  by  intention  to 
injure  self  or  another,  101, 
102 

injury  inflicted  by  another,  101 

intoxication,  100,  103,  104,  302, 
303 

provisions  generously  con- 
strued, 105 

provisions  in  general  not  un- 
reasonable, 104 

"recklessness,"  103 

self-inflicted  injury,  100-102 

under  ideal  law,  301-303 

under  Soldiers'  and  Sailors'  In- 
surance Act,  275 

"willful  misconduct,"  100,  102, 

103 

Misconduct,  serious  and  willful, 
construction  of  phrase  in 
English  act,  44 

Model  law,  German  act  consid- 
ered, 31,  32 
Montana 

compensation  law  invalid,  63, 
64 

labor  opinion  on  employments 
covered,  257 

labor  opinion  on  waiting  pe- 
riod, 254,  255 


state  insurance  fund,  141,  155 
Montenegro,     compensation     law 

enacted,  48 

Mutual    Insurance     (see    Insur- 
ance) 

N 

Negligence,  common  law  liability 

for   (see  Common  Law) 
Nevada 

insurance  defects,  158,  159 

monopolistic     state     insurance, 

139 
Newfoundland,  compensation  law 

enacted,  49 
New  Jersey 

abolition  of  common  law  de- 
fenses, 181 

act  nominally  optional,  180-184 

administration  by  the  courts, 
211-225 

compensation  law  upheld,  66 

disease  not  mentioned  in  act, 
96 

dismemberment  award  sched- 
ule, 202-203 

effect  of  presumption  of  ac- 
ceptance, 182-184 

Employers'  Liability  Commis- 
sion, 225-228,  230,  231,  188, 
193,  200,  218,  219,  221 

Employers'  Liability  Act  of 
1909,  179 

employments  covered,  185-189 

employments  covered  by  com- 
pensation act,  85 

first  permanent  American  act 
in,  178 

forfeiture  for  misconduct  un- 
der act,  102 

insurance  features,  207-211 


INDEX 


labor  opinion  on  schedule  of 
awards,  251 

labor  opinion  on  waiting  pe- 
riod, 121,  122,  255 

maximum  and  minimum  pay- 
ments, 200-202,  205 

medical  and  surgical  aid  pro- 
visions, 118 

medical  attendance,  198-199 

methods  of  administration,  109 

new  administrative  machinery, 
224-225,  232-238 

occupational  disease,  189-195 

possible  influence  of  Ives  case, 
180 

presumption  of  acceptance  of 
act,  182-183 

presumption  of  acceptance, 
106 

scheme  to  avoid  constitutional 
objections,  65,  66 

schedule  of  awards,  195-207, 
249 

time  limitation  on  awards,  203- 
204 

waiting  period,  198 

Workmen's  Compensation  Aid 
Bureau,  225,  227,  228-232, 
234,  237 

Workmen's  Compensation  Bu- 
reau, 224,  233-238 
New  Mexico 

employments  not  covered  by 
act,  94 

forfeiture  for  misconduct  un- 
der act,  102 

method  of  administering  act, 
122 

no  waiting  period  in  act,  116 
New  York 

commission  of  inquiry,  53 


distribution  of  compensation 
insurance  among  various  car- 
riers, 162 

employments  covered  by  con> 
pensation  law,  86 

extraterritoriality  and  the 
courts,  128 

first  compensation  law  uncon- 
stitutional, 59-61 

forfeiture  for  misconduct  un- 
der act,  102 

insurance  provisions  of  act,  136 

labor  opinion  on  methods  of 
administration,  262 

labor  opinion  on  waiting  pe- 
riod, 255 

state  insurance  fund,  141,  157, 

158 
New  York  Central  Railroad  Co. 

v.  White,  79 
New  Zealand,  compensation  law 

enacted,  48 

Noble  State  Bank  v.  Haskell,  62 
North  Dakota 

labor  opinion  on  employments 
covered,  258 

labor  opinion  on  methods  of 
administration,  263 

labor   opinion   on   schedule   of 

awards,  252 
Northern     Pacific     Ry.     Co.     v. 

Meese,  77 

Norway,   adopts   compulsory  in- 
surance, 47 

Nova    Scotia,    compensation   law 
enacted,  49 


O 


Occupational    disease    (see    D*»- 
ease,  Occupational) 


330 


INDEX 


Ohio 

compensation    law    upheld    by 
the   Supreme  Court,   76 

compulsory  principle  adopted, 
107 

insurance   experience,    156-157 

semi-monopolistic    state    insur- 
ance, 141 
Oklahoma 

labor  opinion  on  employments 
covered,  258 

labor   opinion    on    methods    of 
administration,  262 

labor   opinion   on   waiting  pe- 
riod, 254 

Old    age    insurance    (see    Insur- 
ance) 

Ontario,    compensation    law    en- 
acted, 49 

Opinion  of  the  Justices,  62,  63 
Oregon 

injuries  covered  by  act,  99 

monopolistic     state     insurance, 
139 

no  waiting  period  in  act,  116 

principle  of  mutuality  in  act, 

163 

"Out   of   and    in   the    course   of 
the   employment" 

adopted  in  United  States,  94 

construed  by  American  courts, 
95 

construed    by    English    courts, 
40-43 

variations   on  phrase  in  some 

acts,  99,  100 
Outworkers 

not  covered  by  some  compen- 
sation laws,  92,  94 

would  be  covered  by  ideal  law, 
300 


Pennsylvania 
labor  opinion  on  occupational 

disease,  260 
labor   opinion   on   schedule   of 

awards,  251 

labor   opinion   on   waiting  pe- 
riod, 255,  256 
Pensions 

defects  of  system  of   (see  In- 
surance,  Soldiers'   and   Sail- 
ors') 
to   injured   German   workmen, 

26,  27 

Peru,     compensation     law     en- 
acted, 49 

Philosophic    influences,    in    Ger- 
many, 21 
Porto  Rico 
labor   opinion   on   schedule   of 

awards,  252 

no  waiting  period  in  act,  116 
Portugal,   compensation   law  en- 
acted, 48 

Priestley  v.  Fowler,  6 
Public    Employments    (see    Em- 
ployments, Public) 


Q 


Quebec,    compensation    law    en- 
acted, 49 


Railroad  employees 
excluded      from     benefits     of 

some  state  acts,  91 
Federal    Employers'    Liability 
Act,  1906,  51 


INDEX 


331 


Rhode  Island,  awards  under  act, 
108,  109 

Russia,  compensation  law  en- 
acted, 48 


Safety  regulations,  German  law, 
27,  28 

Second  Employers'  Liability 
Cases,  74,  75 

Serbia,  compensation  law  en- 
acted, 48 

Soldiers'  and  Sailors'  Insurance 
Act  (see  Insurance,  Soldiers' 
and  Sailors') 

South  Dakota 
employments    not    covered    by 

act,  94 
farm    and   domestic   labor   not 

covered  by  act,  89 
limited  coverage  of  disease  by 

act,  96 

medical  and  surgical  aid  pro- 
visions, 118,  119 

Spain,  compensation  law  en- 
acted, 48 

State  ex  rel.  Davis  Smith  Co.  v. 
Clausen,  61,  62 

State  Insurance  (see  Insurance, 
State) 

Sub-contractors   (see  England) 

Surgical  aid  (see  Medical  and 
surgical  aid) 

Survivors'  insurance,  German 
law,  30 

Sweden,  compensation  law,  47,  48 

Switzerland 

compensation  law  enacted,  48 
compensation     principle     first 
recognized,  20 


Texas 

awards  under  act,  109 

farm   and   domestic   labor  not 
covered  by  act,  89 

forfeiture  for  misconduct  un- 
der act,  102 

insurance  provisions  of  act,  136 

medical  and  surgical  aid  pro- 
visions, 119 

Transvaal,  compensation  law  en- 
acted, 49 


U 

United  States 

adoption  of  compensation  laws 
by  states,  53-55 

compensation  for  certain  Fed- 
eral employees,  49-50 

compulsory    principle    adopted 
in  act,  107 

dissatisfaction     with     common 
law  rules,  49 

early  agitation  for  workmen's 
compensation,  50,  51,  53 

Employers'    Liability    Act    of 
1906,  51 

Federal    Workmen's    Compen- 
sation Acts,  1908,  1911,  52 
Utah 

compulsory   principle    adopted 
in  act,  107 

employments    not    covered    by 
act,  94 

farm   and   domestic   labor   not 
covered  by  act,  89 

insurance    provisions    of    act, 
136,  141 


332 


INDEX 


limited  coverage  of  disease  by 
act,  96 

medical  and  surgical  aid  pro- 
visions, 119 

method  of  administering  act, 
125 


Venezuela,  compensation  law  en- 
acted, 49 

Vocational  training  (see  Insur- 
ance, Soldiers'  and  Sailors') 


W 

Waiting  period 
German  law,  27 
in      American      compensation 

laws,  114-117 
in  New  Jersey,  198 
labor  opinions  on,  253-256 
none  in  some  states,  115,  116 
purpose,  115 
two  varieties,  115 
under  ideal  law,  303-304 
War  Risk  Insurance  (see  Insur- 
ance, Soldiers'  and  Sailors') 
Washington 
compensation   law   upheld,   61, 

62 

injuries  covered  by  act,  99 
monopolistic    state    insurance, 
141 


no  waiting  period  in  act,  116 
Supreme    Court    upholds    lawr 

77 

Wisconsin 

commission  of  inquiry,  53 
injuries  covered  by  act,  100 
insurance  experience,  154 
mutual  insurance  in,  163 
West  Virginia 
insurance  difficulties,  156 
semi-monopolistic    state   insur- 
ance, 141 
Workmen's     Compensation     (see 

other  titles) 
acquiescence  of  general  public 

in,  18 

definition,  3 
distinguished     from     common 

law,  10-12 
early  agitation  for,  in  United 

States,  50,  51,  53 
economic  basis,  14-17 
Federal  acts,  52 
limitations  in  various  states,  11 
Workmen's     Compensation     Aid 

Bureau  (see  New  Jersey) 
Workmen's     Compensation     Bu- 
reau (see  New  Jersey) 
Workmen's    Compensation    Pub- 
licity   Bureau     (see    Insur- 
ance) 

Workmen's    Compensation    Serv- 
ice Bureau  (see  Insurance) 
Wyoming,  monopolistic  state  in- 
surance, 141 


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